This will be a mighty tool for decreasing federal spending and converting the present confusing, complicated and convoluted taxing system into a simple, fair, efficient and easily understandable system. Let us theorize that the federal government would submit its budget to the body of 50 states. Let us then say that at least 2/3 of the body of states approved said budget, since the President and Congress seem incapable of establishing or limiting spending themselves. Is it so very difficult to divide the budget by the Gross National Product to determine a percentage? This may be a slight over-simplification and necessarily subject to a few other variables, but in principle, it tells us at what level to set a tax. I would consort with the brightest minds in economics, accounting, the law and the citizenry to introduce a viable program of taxation, which would be suitable to assessing, collecting, remitting, spending, responsibility, accounting and auditing.
What if I told you that the I.R.S. could basically be history? Can you imagine it?
Article I, Section 8 of the Constitution, states firstly, "The Congress shall have Power To Lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence (this is how it appears) and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States". Now, what exactly does "uniform" mean to you? Perhaps it means level, even, equal, fair or balanced. What is your opinion? Do you, however, actually feel that our taxation system is fair, level, even or equal? I surely do not! Our tax code is so riddled with loopholes, exemptions, credits, exceptions and deductions that it is pitiful. It stinks quite frankly. The I.R.S. itself does not understand the tax code, although it would have you think so. The I.R.S. must further the current ridiculous, preposterous system in order to perpetuate itself.
There are many, who avoid or evade paying taxes, including many contractors to the government itself. Cash transactions are not captured. Many file late returns or none at all. Look at the cost to the tax-payer for the I.R.S. itself. At least the Highway Department, for example, gives us a return - safe, maintained and easily navigable roads and bridges. What return on investment do you receive from the I.R.S.? Zip. Notta. Zero. Zilch. That is what you get. The I.R.S. is a dinosaur, which should be extinct as all other dinosaurs are. A One Tax or Single Tax plan should virtually eliminate this self-serving, self-perpetuating, self-feeding and bureaucratic department. The codes become ever more complex and greater in number, which requires more personnel, which demands more money, which requires more rules, which mandates more people, etc.
In 1862, the Bureau of Internal Revenue was created by congressional enactment, as an agency of the U.S. Treasury Department under President Lincoln during the Civil War. Supposedly, this act was passed in an effort to pay the debt incurred by the Mexican War of 1846 to 1848. Ten years later, it was abandoned. In 1894, the Congress of the United States adopted an income tax on individuals and business firms at a rate of 2%. In 1895, this levy was declared unconstitutional by the U.S. Supreme Court. Imagine that! So a bit later, the congress of the day, not to be denied, on February 25, 1913 enacted the Sixteenth Amendment, which vested in congress the right to collect taxes "On whatever source derived, without regard to any census or enumeration" to sustain the beast. The Tariff Act of October 3, 1913 provided a law, under which corporate and individual income taxes were basically fixed at 1%. There is much more detail, but the point is made. One can easily fathom that amounts would change (increase) over the years, due to inflation and other factors, but what about the change in percentage? This change yields a clue that government has grown in size perhaps a wee bit, eh? A slightly larger slice of the total pie now goes to Big Brother.
To me, the One Tax would take one of two possible forms. One Tax would have to be either a flat tax, which is to say that every tax-payer whether a corporation or an individual would pay the same percentage rate on income, or it would be a consumption or sales tax, similar to that which most states now already impose. As in all cases of taxation, there are pros and cons to each of the two systems, and I shall elaborate on them to a degree herein. The main guidelines for development and implementation of a new taxing structure are the same as my basic prevailing principles of simplicity, efficiency, balance, reality and lawfulness.
A cursory examination of a flat tax system, which is an acceptable option to the current nightmare that we endure, would not be my first or final choice. While it would add an element of fairness, drastically reduce the number and complexity of returns to be handled and simplify calculations, there is much that a flat tax will not accomplish. A flat tax will not eliminate the I.R.S. It will not address the avoiders, evaders and cheaters. It will not eliminate the April 15 deadlines. It will not make many credits, exemptions, loopholes and exceptions go away. It will not squelch individual audits. It will not eliminate returns. It will not reduce losses due to cash transactions. It does not lessen the special reporting done by non-profit organizations, self-employed, etc. It will not eliminate deductions, which employers must make from paychecks. I can go on and on. I do believe that a flat tax has its merits and would certainly be an improvement over that, in which we now wallow. I would only consider a flat tax beneficial as an intermediate, stop-gap or transitional measure, not the final form.
Now, may I expound on the merits of a national sales or consumption taxing system. What if I suggested that a national consumption tax would replace all other federal taxes but that it might be 25% to 30% in level (hypothetical)? What if I told you that the I.R.S. would be virtually eliminated, excepting several thousand auditors, accountants, lawyers and managers? Imagine the savings by virtually striking the cost of the I.R.S. from the federal budget - buildings, utilities, telephones, employee wages and benefits, no-charge (nothing is free) vehicle use, insurance costs, computers, lost time, paper for and printing of forms, guides and envelopes and much more. What percentage of the budget pie, do you suppose, goes to fund the I.R.S.? The elimination of this bureaucracy will have a favorable effect on the ultimate consumption tax that one would pay.
One factor that I particularly like about a consumption tax is that YOU get all of your money that you have earned, and YOU may decide what portion to spend and what part to save. This country in 2005 incurred negative savings for the first time in 20 years, according to Mr. Samuel Foreman of Seniors Only Financial. There would be no more April 15 deadlines. There would no longer be any need for employers to deduct income tax "contributions" from your paycheck, which places the money in your pocket and certainly simplifies the payroll function for employers. Eventually, your social security and health care would also come from the national sales (consumption) tax and not be withheld from your paycheck. Can you now see some positive vibrations regarding simplicity, fairness, choice, balance and efficiency?
The collection points are already in place in every state, which currently imposes a state sales tax. How difficult can it be to increase the percentage collected and to remit to Caesar his due? This entire process would be even more greatly simplified and made more efficient, should the individual states elect to implement the same style or ilk of the federal consumption tax, basically eliminating property tax, road tax, school tax, state income tax, state fuel tax, etc. I also like that ALL other federal taxing systems can be eliminated. We can do away with Federal Excise Tax, liquor tax, gasoline (all fuel) taxes, cigarette taxes, utility taxes, estate taxes, capital gains taxes, highway use taxes, social security taxes, medicare taxes and all other federal taxes. The cost of all products and services would be lowered to the "nubs", have existing taxes removed prior to implementation of the One Tax. One will only pay One Tax and only on that, which he or she chooses to spend. Yes, the consumption tax will seem hefty at first, but in reality, will be no more than you are paying now, perhaps less overall. Remember savings will be encouraged by a One Tax, and then, maybe the government could borrow from the U.S. citizens (with strong restrictions) instead of China and South Korea until the deficit may be brought in line. It is all our money, Folks. It is only a question of spend or save or who may borrow it and how it is used.
There will be no more deductions, expensing, depreciation, credits, loopholes, exemptions, exceptions, write-offs, etc. because income tax will not exist. You will not be able to deduct interest on your mortgage, but you will not pay taxes on interest income. Corporations will no longer receive investment tax credits, depreciation and expensing, but they will not pay income tax on profits, nor will their shareholders. Most corporations pay little or nothing in taxes anyway, or far less than a fair share at best.
If states will get on the same program, all other state, county, township and local taxes would be eliminated. Say that the total consumption tax percentage is 40% (25% federal and 15% state). Think of just how simple, efficient and understandable it would be for all of us if we could enter a store to buy a loaf of bread, pay $1.40 instead of the previous $1.00 and know that no other tax is due anywhere at anytime except this consumption tax. Surely, one may say that said tax should not apply to food. That simply means that the percentage of the tax will be higher if it is collected on fewer items. You may purchase the bread, or you may cut the calories, save the money and pay no interest on the income or profit. You will find that corporations will be less likely to contribute to charities since they may no longer write-off the expense (deduct it). This is alright because the corporations are only donating dollars that you paid to them anyway. You should have the money. You earned it, and you should decide if you wish to donate to charity and if so, which one and how much. Both corporations and the government relieve you of your hard-earned dollars and place those dollars where you may not want them to be placed. The consumption tax, One Tax, may not lessen by much your tax burden if any, but it places a degree of control in your hands.
I propose this type of taxing system to you as an extremely viable alternative to the joke, which we now have. If experts put their noses to the grindstone, there is no doubt in my mind that a program can be developed, which is simple, fair, balanced, efficient and lawful as well as easy to administer. The above proposal is certainly by no means in any final form. I merely wish to provoke serious thought and interest. As previously mentioned, every major issue affects and is affected by at least several other issues. A revised tax system will be complicated in development but simple in final form. It naturally will not happen overnight. It will need to be carefully phased-in, piece by piece. I anxiously await the opportunity to scratch border/port security, conscription, immigration and several other issues from the priority list, so we can get our teeth into meaningful tax reform.
NOTE: Our forefathers came to North America for purposes of religious and other freedoms, one of which was freedom from cumbersome, many, varied and unfair taxes. Our government has grown by leaps and bounds over the years, resulting in today's heavy and unequal tax burdens. Should we not consider a program, which decreases the cost of government and places control of spending with those, who earn the money, namely, YOU? How much simpler can it be? You earn the money, and you receive all of it. You will spend your money according to your needs. When you do spend, Caesar will get his just due. If you save more, however, Caesar must tighten his belt, or borrow money from you and not China, South Korea, India or Great Britain.
Some issues are a bit more hairy to describe than others. To render to you the full detail of a One Tax would require many more pages. My intention is to simply show that there are light and hope at the end of the tunnel. I appreciate your reviewing this vital information.
Provisions may be placed in this type of tax bill to raise or lower the rate on a semi-annual or annual basis, and an emergency change provision can also be included. These provisions should only be exercised upon a 2/3 majority vote of the 50 states. No more profit versus non-profit entities. H & R Block, Turbo Tax and other similar such services, say goodbye. You have profited on the complexity of the hideous tax code long enough.
If the federal government will provide safety and security of port and border, thereby guaranteeing the value of your citizenship, a program to insure one's security in society (from birth) and a package, which provides universal prescribed (not cosmetic or arbitrary) medical and dental care, it will have performed mightily. If then, one's state assures the elements of housing, food and education, we will have the ultimate package. Once the human elements are in place for all, let capitalism roar. The implementation of a few social programs will not be a deterrent to capitalism, growth and success, but it will guarantee a safe, healthy, educated and productive workforce to commerce and industry. This is necessary if we are to make more goods in this country, which is paramount to reducing the foreign trade deficit, which is .
Have a wonderful day, and spend some of it contemplating just how beautiful America truly is and what it's going to take to keep her this way. Thank you!