February 20, 2006
TIME BETTER SPENT MAKING MORE MONEY:
The Fair Tax: Stop the Tax Cheats (Jan Larson, February 19, 2006, Chron Watch)
Another factor that significantly affects tax compliance is the complexity of the tax code. According to a report from the Americans For Fair Taxation [3], the federal tax code, rules and IRS rulings comprise more than 60,000 pages. While complexity undoubtedly leads to some paying more than they rightfully owe, that complexity also results in billions in unpaid taxes.The report also indicates that individuals and businesses spent over six billion hours at an estimated cost of $265 billion dollars attempting to comply with the maze of tax rules and regulations. This is equivalent to a workforce of over 2.8 million people spending the entire year doing nothing but tax compliance.
To cover the uncollected taxes, the 130 million U. S. taxpayers are effectively subsidizing the tax cheats to the tune of over $2600 each. In other words, if the cheaters were prevented from cheating, the average taxpayer would see reduction in his or her tax bite by over 30%. [...]
There is a solution however. It is a solution that would eliminate individual compliance requirements and make April 15 just another day. This solution would greatly reduce business compliance costs and similarly reduce the size and scope of the IRS. This solution would lead to job growth and economic expansion. This solution would eliminate most of the opportunities for tax cheats and political manipulation. The solution? The Fair Tax.The Fair Tax would eliminate all income and payroll taxes and would replace them with a national sales tax paid on the retail purchases of new goods and services. The Fair Tax protects low-income individuals and families by rebating taxes paid up to the poverty level.
Taxing consumption to encourage savings is a lynchpin of the President's Neoconomics
Posted by Orrin Judd at February 20, 2006 6:39 PM
Two other major advantages:
1) People would see their level of taxation each time they bought something instead of the withholding they never see, and
2) It would tap into the hidden income in the underground economy.
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at February 20, 2006 7:29 PM
I doubt if every flea market and garage sale would emerge from the "underground economy," but it would be hard to do worse than our present system.
Posted by: PapayaSF at February 20, 2006 8:28 PMHe's not talking about garage sales. JD, you old dog you.
Posted by: joe shropshire at February 20, 2006 8:50 PMA national sales tax to replace the income tax is so unlikely that its safe to say it ain't ever gonna happen.
Posted by: ept at February 20, 2006 10:29 PMJoe: True, but hookers and drug dealers probably aren't being honest their tax returns now, so it's probably a wash. But if there were a 23% national sales tax on top of state and local sales taxes, informal retail outlets become extremely attractive.
Posted by: PapayaSF at February 20, 2006 11:02 PMfundamental tax reform is popular. In a democracy the popular happens.
Posted by: oj at February 20, 2006 11:10 PMGuys-
Hookers and drug dealers may have no income but they consume every friggin day. What's a matter with you guys?,stuck in the burbs too long?
Posted by: Tom C.,Stamford,Ct. at February 20, 2006 11:18 PMThe present income tax system is truly the Devil's work. It is the second most vicious thing in our history, only behind the great Kindermord.
Aside from being a frightful occasion of sin, almost encouraging millions to lie and cheat, and to wish they could better lie and cheat, the system seduces them to entertain vices of envy and of greed.
The moral rot spreding out from the graduated income tax is deep indeed. I have decussed this matter with many people who I know are paying A.M.T., who are solidly behind the Income Tax, because it "soaks the rich."
Furthermore, the taxpayers are seduced into thinking that the system allows thom to "get over" on their fellow citizens. Even though the many "breaks" cancel one another out, taxpayers are encouraged to believe that they are getting an advantage over others citizens.
The conclusion: don't hold your breath.
Posted by: Lou Gots at February 21, 2006 12:36 AM
Worth the ticket price, just to hear the steam whistling out of Lou's ears.
Posted by: joe shropshire at February 21, 2006 1:00 AMThe Fair Tax wouldn't end up replacing income taxes for long - we'd eventually end up with BOTH.
Besides, the howls from the public when everything goes up in price by 25% would quickly cause Congress to sound the retreat.
Yes, a rational person would think "My paycheck's larger, so the higher prices are a wash", but (at best) only one in four Americans thinks rationally.
Maybe they could ease into it over a decade, gradually raising sales taxes and lowering income tax rates.
Posted by: Noam Chomsky at February 21, 2006 3:25 AMNoam:
Which is why tax reform has to be done by constitutional amendment, repealing the XVIth.
Posted by: oj at February 21, 2006 7:17 AMCheck out the Fair Tax Blogburst to discuss this further.
Posted by: Buzz Brockway at February 22, 2006 10:16 AM