Sorry but that just won't fly. The moment you put in any exemption K Street returns in full force. Better to just let each individual decide for themselves what their necessities are.
That might seem well and good, but you aren't saving a dime, and you aren't getting rid of the IRS (just adding a prebate division), and then someone has to generate what is the 'necessary' amount of food, heating fuel, medical care, etc, so it can be averaged and the amount of the checks determined.
Problem is, the average person has one ovary, one lactating (or capable) breast, one testicle, etc. IOW, they don't exist. Where I live, it costs more for heat in the winter. Not an option, really, I have known a couple of people who froze to death. Let someone do a round of chemo....and pay the tax on that, and if they live long enough they might get a fraction of the taxes back.
We can all agree on what is "necessary" for everyone: Food, water, medicine/doctors, and energy to heat/cool your living space. I wouldn't even tax houses (occupied primary residence), and all real estate is used, anyway (prove no one ever set foot on it or owned it before). There are plenty of other things to tax, which are not necessities, and if a boob job slips through the cracks, they'll be buying clothing to show them off, so the tax will be collected elsewhere. Same with a 6000 square foot house: they have to furnish it, and there's the ka-ching for the Government.
Back to sole proprietorships. Income is equal to revenue taken in minus expenses. The net, not the gross. If you can't deduct expenses, you are being taxed on the gross. If your actual profit margin is 30%, and you are being taxed at 10%, try to beat the rush for a bridge to live under, because you aren't going to do enough business, especially with a sole proprietorship, to eat.
