America’s federal tax code is in dire need of reform. It is designed as a progressive system in which your tax rate is proportionate to how well you are doing—helping lower- and middle-income Americans have more cash in hand to put toward paying the bills and getting ahead. Yet, as Warren Buffett points out, the wealthiest Americans can pay tax rates that may not even be half the rate many middle-income families pay.
We should flip the tax code on its head to make the tax code fair and progressive again. Tax earned income at the lower capital gains rates (10 or 15 percent) and tax capital gains at the current earned income rates (10, 15, 25, 28, 33 or 35 percent). This would cut taxes on middle-income families and small businesses by 57 percent.