Actually, TAFKASE's plan sounds pretty good to me.
I remember proposing something similar to it here a while back.
Little or no tax on the poor, and a fixed percentage on everything earned above the poverty level. No deductions, no exemptions, no brackets, dodges or loopholes, no special favors to people who can afford accountants. One major advantage is it would put out of business a whole bunch of financial advisors and IRS clerks.
The cut off-off point between rich and poor, as well as the percentage of the taxation, could be adjusted by legislation and political debate to meet conditions. But the basic plan sounds fair and workable to me.
However, I would make no distinction between earned and unearned income. Smith Barney says it's all earned.