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The Case for Overhauling a U.S. Tax System Even Congress Doesn't Understand

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evaneemcmi of CO 12:46PM August 17, 2009

+1

soundtracks of AL 6:03AM July 17, 2009

I bookmarked this link. Thank you for good job!

soma 180 of WA 6:35AM July 04, 2009

After two years, the IRS informed me that I forgot to include some income from two sources (two years ago). So, I paid the amount plus interest.
Now I see that the new head of tax system did the same thing in past years.
If the IRS knows what I owe, why not just send me the bill. I'll pay it and be done.
Both of us have saved 480 billion dollars over some period of time.
And I have saved a lot of my own money and time trying to figure out what "I owe!"

C Bell of IL 10:18PM January 28, 2009

As long as there is an income tax, there will be a complex set of rules about what is income and what isn't, what is deductible and what isn't, and lobbyists trying to get tax breaks, and Congressmen seeking power by manipulating tax breaks. The only way to really simplify the tax code is to abolish the income tax.
Besides the huge drag on the economy and the increased cost of goods and services caused by the effort it takes to comply with our present tax code, we are taxing things we want to encourage, namely work, income, savings, investment, and job creation. To encourage those desirable activities, we need to stop penalizing them with taxes and instead tax consumption.
The proposal described in detail at www.fairtax.org calls for a 30% sales tax (23% tax-inclusive rate, explained on the web site) on all new retail goods and services (used goods, educational services, and inputs into retail products are excluded) that would replace all personal and business income taxes, social security, medicare, and self-employment payroll taxes, estate and gift taxes, and capital gains taxes. It would be (close to) revenue neutral at the start, but would increase government revenue over time due to the greater economic growth it would unleash. The poor would automatically be sheltered from the tax by a monthly check sent to every registered household equal to the monthly federal poverty level for the size of the household times the tax-inclusive tax rate.
Sure, a 30% sales tax on top of state and local sales taxes seems hard to swallow, but businesses could lower prices due to reduced costs from no business income taxes, no payroll taxes, and no costs to comply with an income tax. You and I would take home 100% of our paychecks. Interest rates would fall because banks would not owe taxes on the interest payments they receive (look at the lower interest rates on municipal bonds verses AAA corporate bonds). This and the large increase in personal income would make homes more affordable (and reduce the current foreclosure crisis). Imports would get the national sales tax, while our exports would be cheaper due to the reduces business costs mentioned above. This would increase manufacturing jobs in this country instead of driving them overseas. Foreign capital would flood in because it wouldn't be taxed. Charitable giving would increase because of greater personal incomes. Only 30% of people itemize their deductions to take advantage of the tax break for charitable giving, now. The underground economy would be taxed when they spend their illegal income at established businesses. Tax enforcement would be simpler because the tax collection points would be much fewer--just businesses instead of every household and business in America.
Hey Sam, your blog would be a great forum for discussing this idea. It will take a massive grassroots campaign to dislodge entrenched interests in Washington and get this passed.

Dan of AZ 1:37AM January 20, 2009

The complexity isn't in the tax rates. Anybody can look up the correct tax in the tax table if they can derive the AGI from the gross income in a few steps. The complexity lies in the various exemptions, deductions, credits, and the different schedules and forms.

Les of VA 8:17PM January 13, 2009

No, no, no! You are playing the Fed's game!
time to stop the game. Don't play by the enemy's rules. Remove the ability of the Federal government to levy taxes!
We need to think outside of the Feds box, people!

Xiaoding of NC 12:24PM January 13, 2009

"Americans spend 7.6 billion hours annually trying to figure out their federal taxes. Working eight-hour days, five days a week, 50 weeks a year, that's the equivalent of 3.8 million full-time workers."
Great, all Obama has to do is to double the complexity of the tax code, and there's three million new jobs created!

Kyle Bennett of AZ 11:14AM January 13, 2009

Simplicity is NOT "the elimination of every estate-tax-avoiding trust scheme". Simplicity (and fairness, I might add) would be the elimination of the estate tax altogether, since it is nothing but double-taxation on gifted assets that have already been fully taxed as income. Of course, the departed are an easy mark for government with an insatiable appetite for power, and getting a grasp on your money is the best way to acquire it, as previous posters have stated.

John in NY of NY 10:30AM January 13, 2009

Congresscritters don't see the tax code as a tool for raising revenue -- that's a side effect, at best. Congress uses the tax code as an instrument of power, gaining it, holding it, expanding it. Unless and until the American people demand and keep demanding lower taxes and less government, (and probably even then), this will never happen. So long as we keep appealing to Uncle Sugar in Washington to provide ever-more goodies from the Federal candy jar, we're going to continue to get screwed.

Mark Alger of OH 10:21AM January 13, 2009