Reform of the Tax System
The current tax system of the United States of America is broken beyond repair. The income tax system our Government uses to collect federal revenue is a complex and confusing proposal. Currently the United States tax code consists of 45,662 pages and its collection makes up for 18% of our GDP. This has come along way since the turn of the 20th century when the tax code consisted of only a couple hundred pages and only comprised 3% of our GDP. Today the Federal Government collects $2 Trillion dollars annually in taxes.
The tax system does not work though. In 1976 Jimmy Carter proposed changing the whole code and of course it went nowhere. The compliance cost of our current system cost our taxpayers $200 Billion dollars just to get the forms filled out and the taxes paid. If we include the lost time people have in order to figure out the complex code the number would be even more incredible. At the end of the day the tax code is not even fair. Congress has loaded exemptions and special cases through out the code that has created an inequitable system. People who can afford the best tax attorneys and advisors are able to pay less in taxes than those who cannot afford such special advisors. This just makes a bad system even more unfair.
As a society we have expressed concern about our ability to save as a whole. Our tax system makes it harder for that to happen. There is no advantage in the tax system to promote savings except for IRAs and Roth IRAs. These saving vehicles have limits though. Under the current law those under 50 can only save 5,000 dollars a year in these vehicles. If they are so good for us why limit the ability we have to contribute to them.
Many experts now believe that the income based system cannot be made simple and equitable. So what must we do to fix our tax system? A consumption based tax seems like the most logical solution. Of course special attention should be given to those who do not make a whole lot of money and could be hurt by this shift. We should make several considerations at this level, possibly exempting food and medicine, or refunding the tax paid on the first 20,000 dollars of goods purchased each year. A consumption based system with such protections would allow Americans to control the amount of tax paid by making decisions based on what they should buy. It would encourage savings because people would not be taxed on the amount of money they saved and would be able to grow their saving quicker without taxing the growth of their savings. This system would also fix problems that are occurring in the present system that are causing real problems today like bracket-creep and the Alternative Minimum Tax. We would also save a lot of money at the Federal Level by eliminating the Internal Revenue System.
A new tax system is a must for the United States of America. We must encourage saving while eliminating the inequities of the current tax plan.
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Comments: 23
Administrative costs, no matter how you cut it. But I don't think taxing carbon should be that challenging. Besides, that doesn't single anyone out - it doesn't single out corporations or individuals. All are treated the same. You get to choose how much tax to pay by how much carbon you produce. Imagine the drive toward efficiency. The only reason it wouldn't work (for long) is that government would soon be without revenue, because people and companies would figure it out within a decade.
Probably not necessary. The means are already available for corporations to buy efficiency, and they are fast becoming available for individuals. There's alot of $$$ to add to the bottom line by avoiding taxes, saving energy - and, for some, producing and expanding the technology. What's not to love?
Thanks. Your ability to keep from getting personal and just discuss issues is really refreshing. Thanks for that as well.
The tax will not add 23% to the current price: Reason: Corporations do not pay their taxes, they add them to the sales price so you pay them. Economists, accountants and financial managers agree that prices will drop about 22% when taxes are eliminated. For example, a radio costing $!00 has $23.00 included that the companies involved in supplying it add to their price. With no taxes, competition would push the prices down to $78.00 (22% less). The Fair Tax would add $23.00 to the price so your cost of the item would be $101.00 but you would not pay any income taxes. Look at your pay check and add back in your deduction for taxes and Social Security and medicare. That is how much you would save.
The low income are well treated. As the bill is written and now has 61 co signers it gives a rebate at the beginning of each month to each head of household for the taxes they would pay for basic necessities. A family of 4 would get about $430 per month as an advance or prebate.
Also, low income and seniors can buy many items used and pay no taxes.
It has been studied very much and you can have more income (IF you earn $50,000 per year you will increase your income about $10,000 according to charts I have made).
Your taxes will be paid by the affluent who spend and like to buy new. Also by visitors, drug dealers and crooks who steal large sums that they now spend on high priced items without paying any tax.
The US will become the world's favored haven for tax protection and investment around the world will come here for protection. Corporations who now spend loads on off shore tax protection will bring their money home. This will result in lots of savings and reduce interest rates and spur expansion and better jobs.
The flat tax is different. It was tried some years ago and immediately increased by congress. It does not accomplish the same goal and needs the IRS to stay at the same level and you still have to deal with April 15th. Do away with Tax day and tax deductions and the IRS. Have more income and better jobs. Support the Fair Tax. Go to www.fairtax.org to check it out and read the studies supporting it.
If you read all this, thank you and my grandchildren will thank you and if possible I will bless you from above. I am 77 and do not have much time to convince you that you need to study this.
You can still add carbon taxes to specific prices if you want. Do it as a sales tax to force more mass transit. There is already an organization set up to collect consumption (sales) taxes.
Like I said, it does have more pros than cons; which is why I like it.