10% income tax for all citizens. (If you really want to wangle, then maybe make a second, higher, bracket for the 1%).
It'd be more like 30%. Direct income taxes are like 19%, then you have a bunch of other revenue.
No corporate income tax (because that's just an inefficient, indirect, individual tax). (There's some wangle room here for me, but you'd have to make your case)
It is a poor revenue source. I tag it with the Dividend tax because that's the only way to keep the benefit tied to productivity; eliminating the general fund part of the corporate income tax isn't unreasonable, but needs to happen in a fiscally- and socially-responsible manner.
Citizens making less than a certain amount (poor people) don't pay taxes. (Much more straight forward than government hand-outs)
You lose out on job-creating impacts. Likewise, there aren't enough jobs to carry all job-seekers, so you have people who are willing to work but can't. You also have things like people living in Baltimore City's poorer neighborhoods with two full-time jobs, pulling $54k, still unable to afford healthcare for their two kids, mortgage, food, car insurance, etc.
Obviously such a simplistic plan would fall apart once it hits reality. But isn't it sort of the right direction? Where am I going wrong here?
The same place the current system is going wrong: no automatic self-healing function. The Dividend is, in part, designed to repair localized and non-localized economic damage: poor families, collapsed industry cities, and recessions.
Baltimore is a good case study: the city was a major trade hub, had corporate headquarters for things like the Tide Detergent Company, and had major industry to build ships and planes and even just make steel and brick. Trade went away, many of those corporate HQs merged with Proctor and Gamble out of state, and the major industry flat out collapsed. A city that supported over a million jobs now can't handle a population of half a million, more than half of whom are children or secondary householders who don't have jobs.
Baltimore creates an enormous draw for housing assistance, food stamps, small business administration loans (another Federal function to drive economic growth by injecting tax-source money into poor economies), State and Federal aid, and so forth. Over a billion in Federal spending goes there, and it's not enough.
With the Dividend, the Federal taxes actually come down. At the same time, $2Bn extra get shoved into Baltimore in the year 2016 model (Maryland gets $30bn--over 8% of its GDP). Two-adult households get $15k if they're unemployed; at the $50k level it's $10k. That money isn't taxed as income, but registers as unearned income for computing welfare eligibility: HUD and SNAP spending are spread out, and even reduced. At the same time, these struggling households now have money to spend, and spend it on needs--and then on wants. Middle-class households get a boost, too, and spend that on additional luxury.
That spending creates a need for local trucking, retail, and other service and supporting jobs. Jobs mean these poor households can work and become less-poor; and their income, representing productive labor, is taxable, and feeds (thus increasing) the Dividend, the Federal revenue ledger, and the State and Local revenue ledgers. With more income from working, these households also spend more. It hits equilibrium eventually, probably around a 5% GDP boost, although I don't have sufficient data to calculate it out fully.
So the burned-out, collapsed industry city that has been unable to recover in over 50 years experiences a sudden renaissance. It recovers in a few months, and is booming in a year or three. Less-poor cities across America won't see such a dramatic effect: if they're at about the national average income-per-capita, they'll see only a relatively-small boost. The poor inner city, however, is going away forever.
In recession, you'll see that benefit drop by around 5%, maybe 8% (2008 Great Recession). $376/year or $31/month, in 2016 dollars. Remember when we went from 5.2% unemployment to 10.1% in under two years? Imagine the above hitting the entire nation during that.
It's a machine. It's fancy engineering. It's not just an anti-poverty program; it's technology. Odd to think about policy as technology, isn't it?