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NEW - In 2016 the 2-4-8 Tax Blend will become 2-4-8 Tax Choice
The "choice" would allow all taxpayers to choose an income tax rate between 8% and 28% paired with a net wealth tax rate of 2% going down to zero. Wealth taxes paid would reduce Estate and Gift taxes (also set at 28%). This would encourage wealthy individuals to pay some net wealth taxes as a form of inexpensive life insurance.


C - Corp
4% VAT
8% Income

2-4-8 Tax Blend

Outline for Tax Analysis and Scoring of Tax Plan

Changes to the 2-4-8 Tax Blend (updated September 2012)

1.     Removed deductions for state and local taxes

2.     Added exemption for Retirement Funds (subject to reasonable limits to be determined)

3.     Added net wealth exemption for $15,000 cash (credit up to $300 per person)

4.     Deferral of wealth tax payment permitted for seniors and persons in need due to limited cash liquidation (i.e. high value of primary residence and limited income). Tax due upon sale of property.

NEW: Two changes in July of 2013 :



Tax Plan Overview:

The 2-4-8 Tax Blend uses individual net wealth, sales, and both individual and corporate income as tax bases. All gross income and assets are taxed (i.e. deductions, credits, etc. are eliminated) except:

·       wealth tax exempt and income tax deferred until withdrawal on individual retirement savings plan assets up to $500,000 value per person

·       wealth tax deferral permitted for primary residence value up to $1,000,000 for retired or disabled homeowner with less than $500,000 in additional assets and under $50,000 in income.

·       wealth tax exclusion for up to $15,000 cash per person (includes persons now considered dependents on income tax, applies only to accessible funds in bank checking or savings account)





Individual income tax at 8% on all income (except capital gains, tax exempt retirement funds and government bonds currently not subject to tax)

Individual Gross Income (no tax exemptions except for business deductions to compute profit)

Capital Gains (excluded/not computed/not taxed)

Tax Exempt Government Bonds (interest excluded)

Tax Exempt Retirement Funds (up to $500,000 or to $1,000,000 for married persons)

-[requires estimate of excess retirement funds]

Non-Compliance (10% reduction or as otherwise standard/recommended)

Average Net Wealth Tax - 2% tax on average individual net wealth (excluding $15,000 cash per person and $500,000 in retirement funds)

Individual Assets (average value)

-[requires estimate and exclusion of cash assets below $15,000 per person]

Individual debt (average value)

Non-Compliance/Underestimate (20% reduction or as otherwise standard or recommended)

4% business value added tax (VAT)

Businesses pay 4% on gross domestic sales of goods and services but may deduct VAT taxes paid by suppliers of any and all goods and services. The VAT would apply to new and used goods.

Total domestic sale of goods

Total domestic sale of services

Non-Compliance (10% reduction or as otherwise standard or recommended)

8% corporate income/profit tax

Corporate taxable income (profit)

Non-Compliance (5% reduction or as otherwise standard or recommended)



Miscellaneous taxes and fees

No estate tax

No gift tax

Per current law except:

Taxes on items in the nature of goods and services that would be subject to VAT tax (i.e. gasoline, alcohol, cigarettes, telecommunications, etc.) would be reduced by 4% so as to eliminate increase based on special tax and VAT.


Suggested Analysis

Assuming all baselines are conformed to tax law changes as indicated by the 2-4-8 Tax Blend and that the 2-4-8 tax rates continue, what changes would there be over the next 10 years in:

Consumer Spending

Number of Jobs

Rate of Unemployment

Mean individual income (by income quintile and wealth quintile) [quintile or smaller unit]

Mean individual net wealth (by wealth quintile and income quintile)


Individual tax liability versus current law projections (by net wealth and income groups)

Corporate tax liability versus current law projections

Miscellaneous taxes and fees versus current law projections


Federal Revenue

A.    Revenue from individual income tax

                        Business portion (pass-thru)

                        Other Income

B.    Revenue from individual net wealth tax

B1. Total individual assets

B2. Total individual debts

B3. Total cash assets exempted by $15,000 limit

B4. Total tax exempt retirement assets exempted by $500,000 limit

C.    Revenue from VAT

                        C1. VAT from C Corporations

                        C2. VAT from pass-thru business

D.    Revenue from Corporate income tax

E.     Miscellaneous taxes and fees


Federal Budget Deficit

All additional standard comparisons and projections used in comparing federal tax reform plans.

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Copyright 1985 to 2015 by Eugene Patrick Devany