My idea is to split personal income taxes into two categories - earned and unearned. Earned is salaries, piece work, etc... IE you 'did' something to earn that money. Unearned is capital gains, interest, dividends, and such, money earned from the simple fact that you 'owned' something. Your first ~$10k of income in either category is taxed at 0%, after that it's tiered in parallel like the current system. Assuming an average return rate of 5%, that's $200k in investments before you start having to pay taxes on the return, which is a good amount for emergencies, college, early retirement, and what not.
That's pretty much what the UK has already. A certain amount of your annual income is tax free (about £8000 this year) after which income above that is taxed at 20% up to the next tier, above which income is taxed at 40%.
Capital gains are taxed at 18% or 28% depending on your total income, with the first £10000 in a financial year tax free. Dividend income is taxed at at the income tax rate, with a deduction to account for corporation tax (so you'd only pay income tax on the dividend if you're taxed at 40%). Bank interest is also taxed at your income tax rate (20% automatically witheld, if you're a higher rate taxpayer you declare the remaining tax on your tax return). Stock held within a tax-free account (pension, ISA) attracts no capital gains tax and no additional tax on dividends.
Obviously, if the corporation tax is abolished somebody is going to have to make up that tax revenue, which ends up being the tax-paying citizens, so the tax rate for us is only going to go up. And bear in mind that similarly to large corporations, many high net worth individuals take advantage of loopholes in the tax code to minimize their tax bill. It's not a sense of injustice that makes people go into the 'shady' areas of the law to avoid tax, it's greed.
They would hire more people or pay them more.
Why would they do that? They're not charities, employing people for the fun of it. Unless there's a need for more employees, nobody else is going to be employed, and those that are employed aren't going to earn any more than the companies can get away with paying them based on the job market. And even then, those employees (and everyone else) are going to have to pay more in tax to make up for the loss of corporation tax.
Are Facebook, Google, et al. who are paying miniscule amounts of tax in Europe and elsewhere demonstrating your theory? By the relative unemployment levels between there and the US, I'm guessing not.
RADIO SHACK LEVEL II BASIC READY >_