Income based taxation is forced taxation, not fair taxation. Income tax credits, exemptions and deductions have lead to impossibly complicated tax code which does nothing but create fraud, waist, abuse and deadweight. It changes every year so it's impossible for anyone but the experts to keep up. It's also a powerful political instrument of voter manipulation and is often used to distract people from more important issues.

When considering a new tax system, it can't be one that targets our back ends (pun very deliberate) and it has to replace rather than add to other taxes like capital gains taxes, fuel taxes, gift taxes, estate taxes, excise taxes and especially federal and state income and sales taxes. It has to be a transaction tax.

A Quick Note: T=BR
(T represents the total tax revenue that the government needs to collect. B represents the base. For an income tax system, the base is the number of tax payers. For a transaction tax, the base would be the number of taxable transactions. R represents the tax rate or percentage.)

I rejected the Fair Tax (www.fairtax.org) because it would add an extra 18% to 23% to all sales, on top of all state taxes. This tax base is only slightly larger than the income tax base which is why the rate is about two thirds of the average income tax rate. It would also have to come with exemptions otherwise it would literally put low income families and retirees out on the street. That would further restrict this tax base, increasing the rate and opening the door to voter manipulation.

So far, the best transaction tax proposal I've ever hear of is the Automated Payment Transaction Tax (APT Tax) (www.apttax.com). It replaces all of the taxes I mentioned above and would apply to ALL transactions- no exceptions. It would apply to all sales as well as stock and bond trades, international transactions on imports and exports (so foreign countries would be made to pay part of the tax) and currency exchanges. It would be collected automatically by the banks on all EFTs (electronic funds transfers) but it would be split 50/50 between the account holders so each party in a transaction would only pay half of the tax.

The APT tax base is estimated to be about a hundred times (100x) larger than the income tax base- the largest conceivable tax base- so the rate would be about a hundredth (1/100th) of the average income tax rate. The average income tax rate is estimated to be about 30% so, in order to collect the same total tax revenue, the APT tax rate would only need to be about 0.3% and the parties in each transaction would only pay about 0.15%. Even if transactions fell by 50%, the APT tax rate would only need to be 0.6% and each party would only pay 0.3%. I'm quite sure that would make anyone who actually pays income taxes very happy as well as low income people who may not pay income taxes but who face state sales taxes as high as 9%.