If this is the way you truly see it, then nobody will ever convince you otherwise. And.....the states already are doing the collecting. They really don't mind. See all those state buildings, employees and payrolls all around you?
Okay.....I'm for a consumption tax; something similar to the "Fair Tax" plan. Now all my fellow ETers who keep arguing against this sort of plan, please do make an alternative suggestion for the elimination of the IRS. Or, do some think the current system is A-Okay and in no need of a fix?:eek:
The real problem here is who is making the decisions. The politicians will never do what's "right"...only what they are paid for. The current tax code allows them to create all sorts of loopholes to favor their biggest contributors I don't like taxes period and really think there should be a long term plan to move everything away from government control. I also know that will never happen unless there is major political reform. With what we have to work with the best we could hope for would be a flat tax. I know it worked wonders for Irelands economy. I believe their current top rate is 10% I have never heard of any country trying a flat tax and not getting good results. Has anyone heard different?
I see it the way Dick Armey does and he is a very notable advocate of tax reform and has given reform of the tax code a lot more thought than any of us: by Dick Armey, former Congressman: " A sales tax is not an income tax. The case for a sales tax begins with one highly appealing applause line. It will allow us, supporters argue, to eliminate the income tax altogether, possibly even repealing the 16th Amendment, which authorized it and made Big Government possible in the first place. Even if that goal were politically feasible -- and I don't think it is -- the exchange would come at a high price. We would give up the income tax for a more intrusive and pervasive tax system. The reason is simple. If the government sets out to collect a new tax at the cash register, it will soon have no choice but to extend that tax beyond the retailer to every level of production, as it desperately tries to stop inevitable and massive tax evasion. Any sales tax will become a complex, pervasive, multi-rate, value-added tax. We will soon be living under a VAT -- possibly the most insidious tax scheme ever devised. Sales-tax backers often oppose a VAT. But that's what they'll get. To generate sufficient revenue by taxing goods only at the retail level, the government would need to impose a sales tax of at least 20 percent, which means that consumers would suddenly find that everything they buy appears to be 20 percent more expensive. But people will not pay such a high tax. They will either find ways to label their consumer goods tax-exempt wholesale items, they will purchase goods in a cash black market, or they will evade it some other way. A sales tax, in other words, will be immediately undermined by a silent tax revolt, and the government -- following the pattern of European countries -- will respond by imposing a VAT. A VAT is assessed at each stage of production and is much easier to collect and enforce for a host of reasons. You can hear the bureaucratic lament in a 1993 report by the Organization for Economic Cooperation and Development, which noted: "Governments have gone on record as saying that an RST [retail sales tax] of more than 10 percent to 12 percent is too fragile to tax evasion possibilities, and it is probably not entirely accidental that in OECD counties, VAT rates are nearly always above 12 percent and that, except in Canada and Iceland, RST rates have always been well below 12 percent." These unhappy governments were speaking from sad experience. In 1967, 21 developed countries had retail, wholesale, manufacturer, or multi-stage sales taxes. Today, 20 out of 21 of these sales taxes have become value-added taxes. Every developed country except Australia that has had a sales tax now has a VAT. (Even Canada and Iceland, mentioned as exceptions when the OECD report was written, have since replaced their retail-tax-only systems with VATs.) Whether or not the sales tax evolves into a VAT, the government would become intimately involved in almost every economic transaction between consenting adults. The simplest exchange, from a vegetable farmer selling his produce to the corner grocer selling a loaf of bread, would be under the shadow of a government tax collector taking his cut. In fact, every businessperson in America would become a tax collector for the government. "But businesses already collect taxes for the government," sales-tax supporters counter. There's a big difference. Today, businesses collect a relatively small share of the income tax, since three quarters of the income in the economy is labor income, paid by individuals. But under a sales tax, there is no direct tax on individuals, so businesses will be responsible for collecting several times what they collect today. That means IRS scrutiny of American businesses could be expected to rise proportionately. Since the 10-12 million businesses in America have fewer rights under law than individuals, we can expect IRS abuses to rise exponentially as well. It would be an administrative mess. A national sales tax may well exempt many basic necessities from tax --beginning with food and clothing. This would lead to bitter disputes over the difference between food and candy, between real clothes and costume accessories. Congress and the courts would likely find themselves debating the nutritional value of Twinkies, the body coverage of sportswear, and much else, just as state governments do today, but on a larger scale. Worse, the federal sales tax and the dozens of different state sales taxes -- aside from having different tax rates -- would likely exempt different items. That means a small businessperson would need to look up the correct state sales-tax rate, apply the federal rate, subtract the state tax rate from items exempted only by the state, or subtract only the federal rate from items federal-only exempted. Then he would need to do separate calculations for each of the states in which he does business. (And he would need to catch any mistakes before the tax enforcer appears.) The likely consequence would be a slowdown in business activity -- and a loss of jobs and drop in wages for millions of American workers. We could eliminate the IRS. Ignoring or dismissing this inevitable tendency for a sales tax to become an all-pervasive VAT -- with a huge accompanying bureaucracy -- some sales-tax advocates nevertheless argue that the sales tax would allow us to eliminate the IRS altogether. The argument is presented with an interesting federalist twist. The states, they say, could collect the new federal sales tax through their existing sales-tax systems. The federal government, then, could do without its own revenue collection agency. We could bring about the ultimate devolution of federal authority. One immediate problem, however, is that five states do not have a sales tax and would not take kindly to enforcing one for Washington. Even those that do would consider the costs of collecting a huge federal sales tax (the main source of federal revenue) an unbearable federal mandate. The enforcement costs for current sales taxes, currently about 5 percent, are manageable. However, if you add a 20 percent federal sales tax on top of that, the compliance problems grow exponentially. It makes little sense for a state government to pay the enforcement costs for a 25 percent tax when it only gets one fifth of the revenue. Many states would simply eliminate their sales taxes. But the point is purely academic. For reasons dating back to the unhappy years of the Articles of Confederation, the federal government will never rely on state governments for its prime source of revenue. It will not happen. In truth, a sales tax would not eliminate any federal agency. It will actually allow a huge increase in the size of the federal government by allowing politicians to raise taxes with relative impunity. Why? Because sales taxes are hidden from the taxpayers, concealed in the price of the goods they buy. Try this experiment. Stand outside a grocery store and ask shoppers as they leave how much they just paid in sales tax. You'll find that virtually no one knows. Can you guess how much you paid in sales tax last month, or last year? The problem is, if people don't appreciate how much they pay in taxes, it is a lot easier for politicians to raise them. Individuals would no longer need to file tax forms with the government. Since people would pay their taxes whenever they purchase an item, some sales-tax advocates argue, the government will never need to know a taxpayer's name. There would be no filing of any tax papers at all by an individual. That's not quite right. Under almost any sales-tax plan, individuals would still file with the government -- but for entirely different reasons than they do today. Dick Armey Policy Review Summer 1995, Number 73 more at: http://www.freerepublic.com/forum/a3b5b25282ac4.htm DS
Do people pressing for a 'flattax' really want a flat tax? Or do you just want all the tax exceptions eliminated and be fine with 3 brackets of 20%, 30% and 40%? I don't think a flattax is very fair, research shows the lower and upper end will benefit at the cost of the middleclass. The taxcode, not only in the US but also other countries should be greatly simplified, but eliminating the IRS is just a silly obsession from most people here (silly people ). A consumption tax would also be favorable, but just to encourage saving. A 10% sales tax could be implemented and 3 brackets of 10%, 20% and 30% for incometax.
Sounds like the GST in oz. Theres a lot of small business's sent under from compliance alone. http://www.taxinstitute.com.au/index.cfm?objectid=4F2F0B26-D565-5B5B-E18E468653B6FEDD
TradingWise, your are the silly one here. That's a great solution...let's just add another tax so the government can grow even larger and steal more of our money. To be meaningful, any real tax reform will have to be combined with government spending controls and additional government reform to reduce the size & scope of the feds. I do not believe this will happen in my lifetime.
The rationale given above is sound why a sales tax (evasion) or VAT is not so good. It encourages black-market commerce and puts taxes on transactions, which is more far more often than paychecks. It is more intrusive to businesses. There's a simple way to encourage savings. 1) Revise and combine IRA's into "American Retirement Savings & Investment Account." $10K contribution fully deductible, no exclusions, as retirement savings with no early withdrawls. $10k other "American General Savings & Investment Account": $10K like a Roth IRA, gains tax free, withdrawls without penalty. 2) Put government matching funds at some percentage of Social Security tax paid into the retirement account, with a certain dollar minimum and maximum per capita (inflation indexed). If not matched by a person's own funds, government contribution is forfeited. This would have a much more specific and direct way of increasing savings, right? Why do advocates push for all sorts of other complex tax schemes which only indirectly address the supposed goal? I have a theory: it's because the goal of those other tax schemes is actually to make things even better for the really rich.
Hey! A flat tax/consumption tax would especially do several things all at once! 1. Get Americans saving more by spending less on JUNK they don't need. How many other countries have garage sales on every block every weekend? 2. Most of the junk from China would be reduced to *needed* items. 3. Trade deficit would improve because of less consumption if imported crap, yes, even gas consumption would go DOWN (look at Europe). 4.Eliminate the majority of stupid functions performed by the IRS! I know people who've gone overseas just so they don't have to put up with such a screwed up tax system full of THOUSANDS and THOUSANDS of rules and LOOPHOLES. 5. I'm sure there would be other advantages. I'm just thinking of the most obvious ones to me at the moment.