My boss and I have been talking about this. It's an interestint concept.
Death and taxes necessary burdens, but the IRS doesn’t need to be
By Russ Maney
Snitch Columnist
Nothing gets your attention like an envelope from the IRS. Especially in the middle of summer, when you have no reason to expect one. It’s the U.S. mail version of a phone call in the middle of the night. You stare at the puke-yellow envelope, knowing it’s not a party invitation.
My sainted, 79-year old mother-in-law got one the other day. She immediately called my wife, worrying that “the Feds” were already on their way to lock her up for tax evasion. While she still insists on paying her own way, she’s not exactly whom the IRS should pursue in the hopes of big payday. She’s also scrupulously honest. The IRS’s letter turned out to be a computer-generated random piece of harassment - our government’s version of “Sorry, just checking.”
Why, in the 21st century, do we have a tax system that requires little old ladies - oops, I mean “very young looking senior citizens” (sorry Mom!) - to fill out complicated forms? The cynical answer is: “So our government can attempt all kinds of social engineering though tax rates, deductions and various other manipulations.”
“Engineer” it has. The current tax code fills more than 2,000 pages. Regulations covering its implementation: 12,000 pages. Court rulings on those regulations: 200,000 pages. The IRS estimated that, in 1985, taxpayers spent 5.43 billion hours complying with the tax code. (Yes, that’s billion with a “b,” meaning more than 184 hours for every man, woman and child in the country. Experts say that total had nearly doubled by 1995.)
Legitimate tax fraud is also a very widespread crime. As originally reported in South Carolina Snitch last April, the Criminal Investigation Division of the IRS conducted nearly 4,000 investigations in 2002. State governments conducted thousands more.
There’s got to be a better way … and there is.
It’s called the Fair Tax Act of 2003, sponsored by the Rep. John Linder (R-Ga.).
According to Americans for Fair Taxation (www.fairtax.org, the source for much of this column), the “FairTax” bill would abolish all federal income taxes, inheritance/“death” taxes, capital gains taxes and payroll taxes (including Social Security and Medicare) in favor of a national retail sales tax.
How much? All final sales of all goods and services would be taxed 23 percent.
Exports and “business inputs” (i.e., sales from one business to another to create a final product, like the sales of automobile paint to car manufacturers) would not be taxed.
Now, before you freak out over the idea of a whopping 23 percent sales tax, including the horror of less economically fortunate people having to pay that much more for baby food, there’s a safeguard built into the proposed law.
Every family would receive a rebate of the sales tax equal to spending up to the federal poverty level. The rebate would be paid in advance and updated according to Department of Health and Human Services poverty guidelines.
Based on the 2003 guidelines, a family of four would be able to earn and spend $24,240 annually - tax-free. They would receive a monthly rebate of $465 ($5,575 annually). Therefore, no family would pay taxes on essential goods and services, and middle-income families would be effectively exempt from taxes on a large portion of their annual spending. Plus, everyone would get to take home their entire paycheck without Uncle Sam taking his huge cut first. Can you image how cool that would be?
Even better, we could all control how much tax we pay through our spending.
Want a $50,000 sports car? Fine, so long as you’re willing to fork over another $11,500 in sales taxes.
Worried about rich people not paying their “fair share?” Under this system, there would be no tax shelters. The next time a Hollywood star spent $12 million on a Beverly Hills mansion, he (or she) would have to cut Uncle Sam another check, for a cool $2.76 million. The more you spend, the more tax you’d have to pay.
Circling back to crime, the FairTax makes taxpayers out of criminals, not criminals out of taxpayers. Federal tax code enforcement would shift completely to businesses. While some small business owners would still try to cheat, you have to figure that nearly all big businesses would work hard to avoid a public black eye for tax evasion.
Better yet, when a thief goes to buy himself a nice new car with his ill-gotten gains, he gets taxed! Conservative estimates put the “criminal/drug/illicit sex economy” at $1 trillion of untaxed activity. (Yes, that’s trillion with a “t.” The entire 2004 federal budget deficit is currently estimated at $477 billion, less than half that amount.)
If rich people should pay their fair share, shouldn’t pimps, prostitutes and drug dealers, too, when they go to spend their dirty dollars?0000000
By Russ Maney
Snitch Columnist
Nothing gets your attention like an envelope from the IRS. Especially in the middle of summer, when you have no reason to expect one. It’s the U.S. mail version of a phone call in the middle of the night. You stare at the puke-yellow envelope, knowing it’s not a party invitation.
My sainted, 79-year old mother-in-law got one the other day. She immediately called my wife, worrying that “the Feds” were already on their way to lock her up for tax evasion. While she still insists on paying her own way, she’s not exactly whom the IRS should pursue in the hopes of big payday. She’s also scrupulously honest. The IRS’s letter turned out to be a computer-generated random piece of harassment - our government’s version of “Sorry, just checking.”
Why, in the 21st century, do we have a tax system that requires little old ladies - oops, I mean “very young looking senior citizens” (sorry Mom!) - to fill out complicated forms? The cynical answer is: “So our government can attempt all kinds of social engineering though tax rates, deductions and various other manipulations.”
“Engineer” it has. The current tax code fills more than 2,000 pages. Regulations covering its implementation: 12,000 pages. Court rulings on those regulations: 200,000 pages. The IRS estimated that, in 1985, taxpayers spent 5.43 billion hours complying with the tax code. (Yes, that’s billion with a “b,” meaning more than 184 hours for every man, woman and child in the country. Experts say that total had nearly doubled by 1995.)
Legitimate tax fraud is also a very widespread crime. As originally reported in South Carolina Snitch last April, the Criminal Investigation Division of the IRS conducted nearly 4,000 investigations in 2002. State governments conducted thousands more.
There’s got to be a better way … and there is.
It’s called the Fair Tax Act of 2003, sponsored by the Rep. John Linder (R-Ga.).
According to Americans for Fair Taxation (www.fairtax.org, the source for much of this column), the “FairTax” bill would abolish all federal income taxes, inheritance/“death” taxes, capital gains taxes and payroll taxes (including Social Security and Medicare) in favor of a national retail sales tax.
How much? All final sales of all goods and services would be taxed 23 percent.
Exports and “business inputs” (i.e., sales from one business to another to create a final product, like the sales of automobile paint to car manufacturers) would not be taxed.
Now, before you freak out over the idea of a whopping 23 percent sales tax, including the horror of less economically fortunate people having to pay that much more for baby food, there’s a safeguard built into the proposed law.
Every family would receive a rebate of the sales tax equal to spending up to the federal poverty level. The rebate would be paid in advance and updated according to Department of Health and Human Services poverty guidelines.
Based on the 2003 guidelines, a family of four would be able to earn and spend $24,240 annually - tax-free. They would receive a monthly rebate of $465 ($5,575 annually). Therefore, no family would pay taxes on essential goods and services, and middle-income families would be effectively exempt from taxes on a large portion of their annual spending. Plus, everyone would get to take home their entire paycheck without Uncle Sam taking his huge cut first. Can you image how cool that would be?
Even better, we could all control how much tax we pay through our spending.
Want a $50,000 sports car? Fine, so long as you’re willing to fork over another $11,500 in sales taxes.
Worried about rich people not paying their “fair share?” Under this system, there would be no tax shelters. The next time a Hollywood star spent $12 million on a Beverly Hills mansion, he (or she) would have to cut Uncle Sam another check, for a cool $2.76 million. The more you spend, the more tax you’d have to pay.
Circling back to crime, the FairTax makes taxpayers out of criminals, not criminals out of taxpayers. Federal tax code enforcement would shift completely to businesses. While some small business owners would still try to cheat, you have to figure that nearly all big businesses would work hard to avoid a public black eye for tax evasion.
Better yet, when a thief goes to buy himself a nice new car with his ill-gotten gains, he gets taxed! Conservative estimates put the “criminal/drug/illicit sex economy” at $1 trillion of untaxed activity. (Yes, that’s trillion with a “t.” The entire 2004 federal budget deficit is currently estimated at $477 billion, less than half that amount.)
If rich people should pay their fair share, shouldn’t pimps, prostitutes and drug dealers, too, when they go to spend their dirty dollars?0000000