(ThyBlackMan.com) I believe in the power of capitalism to harness the human instinct of greed. I believe that profit is a great motive for business transactions and facilitates economic activity and efficiencies. I also believe in fairness. The Herndon Theory of Perfectly Symmetric Individual Income states that the flow of capital has to be facilitated by taxation upon all levels of income earners whom are not suffering in poverty. It proposes to do so by utilizing an hourglass shaped structure which represents an intersection of personal income and personal taxation level (Figure 1). The center of the structure represents the largest area of intersection between income and taxation levels. The center represents the middle class and in the spirit of absolute fairness, I propose that the middle-class in America pay 33% of the federal tax load where incomes are between $65,000 and $125,000 per year.
This group of Americans would be the only group exempt from graduated tax levels in order to provide a strong taxation core which is not as subject to economic extremes as are the wealthy and the poor. The working poor whom earn above the poverty line should be taxed progressively on a real-dollar earned basis up to a maximum of 16%. This limit represents one-half of the 33% of all federal tax liability apportioned to the poor and lower-middle class who shall pay a real-dollar graduated tax rate between 17% and 32%. The upper-middle class and wealthy will be taxed on a progressive real-dollar basis between 34% and 51% while the wealthy are taxed between 51% and 68% I 
propose applying the Herndon Theory of Perfectly Symmetric Individual Income Distribution as a restructure to the United States Federal Tax Code. It must be applied uniformly to be successful without any exemptions.
The model utilizes Brad Delong’s Log Income Levels by Percentile as the basis for determination of taxation strata by income distribution. Delong’s research and graph (Figure 2.) has been cited by both Catherine Rampell and Paul Krugman as statistically significant and applicable. For the purpose of this presentation, I have utilized 2010 income distribution statistics as demonstrated
It is my personal belief that the quality of life for the middle-class of any nation is the bellwether in regards to income distribution and economic fairness in a competitive economy. A market-based competitive economy must revolve around the central feature of consumerism. Consumer behavior is well understood and it has become codified knowledge in terms of who spends what percentage of their income on goods and services, which is the very activity that fuels our economic engine. The nation’s middle class and those wage-earners who earn less are likely to spend 100% of their income as opposed the more prevalent savings and investment behavior among higher earners. A nation’s economic engine only performs in a robust manner when it is sufficiently provided with robust demand from consumers. America’s current business problem is low demand due to lack of disposable consumer income which should naturally be strongest between the 60th and 80th percentile of wage earners. These demographic accounts for 33% of the wages earned and should pay 33% of the taxes.
In order to come to market certainty and macroeconomic strength, I propose that the United States reform its taxation policy into a simple stratified personal income tax at all government strata, but particularly at the federal level as illustrated in Figure 1. I propose this system in the spirit of patriotic duty, shared sacrifice, and fairness. In terms of taxation policy, America has to begin treating its middle-class as just so; in the middle. The nation should also tax low wage earners on a real per dollar earned graduated scale. I believe that it is fair to ask all working Americans above the poverty line to pay taxes. I also believe that those earners below the poverty line should be 100% tax exempt at all government strata. I propose that the upper-middle class and wealth be taxed for 33% of all federal taxes and that the lower-middle also pay 33% of all federal taxes with all tax payers paying real-dollar graduated tax rates to ensure fairness and the integrity of the Income Integrity Hourglass (Figure 1). Real-dollar tax rates progress between the income strata minimum and maximums on a per dollar earned graduated basis depending on the income distribution within each strata.
The design of the Income Integrity Hourglass is easy and simple enough to explain to a child. It provides a simple framework that ensures the flow of capital from the top to the bottom and vice-versa. It insures that that the tax portal applied to the middle-class is sufficient enough to facilitate balanced consumer activity no matter which way the sands of the metaphorical hourglass should shift. The hourglass then becomes the macroeconomic eco-chamber for all personal income in America bar none.
The intent of this design is to simplify the U.S. tax code and can be applied to any government strata. In a vacuum, all other federal tax code would be eliminated and the federal income tax would be applied to all income transactions to include estate income. I propose that a separate tax code using the same model be constructed in parallel designed around business revenue and capital gains in lieu of personal income in American businesses. If applied, this should level the playing field in American business, small American business would be allowed to thrive and large American business would pay a proportionate share of the federal tax liability. This structure will provide statistically significant certainty to the American enterprise and investment markets.
DeLong, Brad (2010). Log Income Levels by Percentile (graph). Retrieved from http://delong.typepad.com/sdj/2011/01/on-the-richness-of-the-rich-once-again.html
Krugman, Paul (Jan 2011). Why does Inequality Make the Rich Feel Poorer? Retrieved from http://krugman.blogs.nytimes.com/2011/01/12/why-does-inequality-make-the-rich-feel-poorer/
Rampbell, Catherine (Jan 2011). Why So many Rich People Don’t Feel Very Rich. Retrieved from http://economix.blogs.nytimes.com/2011/01/11/why-so-many-rich-people-dont-feel-very-rich/?partner=rss&emc=rss
Staff Writer; Darrick Herndon
For more thought provoking articles by this writer visit; blackfrankluntz.
