and....because of a tax return the government knows where you work, how much you have in the bank, how much you spend, how much debt you have, where you have your investments, and whatever else that isn't coming to mind. The government knows so much about a person based on that one little form. Imagine all the knowledge they can gather about you by requiring you to fill out a form each year concerning your financial activities for that year. Could they do that with a flat consumption tax? No, no, no. Income tax is here to stay.....forever!
So the question becomes.... HOW DOES ONE CHANGE THE SYSTEM ? DOES ONE ACCEPT THAT THIS IS NOT POSSIBLE OR POSSIBLE ?
Traditional "establishment methods of protest", political movements, and trying to work within the system is definitely not the answer to change.
My 2 cents. We need a grass-roots movement, similar to the organic support behind Ron Pauls candidacy for the Nomination. Americans need to understand the monetary system and Income tax, how they're related, and why the Founders fought tooth-and-nail against both. This whole corruption is predicated on our ignorance. Its really just smoke-and-mirrors. If people really understood that all money is debt, created from nothing, and their entire livelihood is dependent on paying off interest and principle to parasitic bankers who claim ownership over property via legalized counterfeiting, well, we'd have a revolution tomorrow. Just as Henry Ford said. We just need to get the information right, document it, dumb it down, then get it out there. It's already happening, but not quick enough, not extensive enough and the distribution channels (aka mediums) are limited largely to the Internet. There's a reason why Mainstream media never broaches the real issues. They're cowards owned by the Elite. Its all about Control.
This is not fair to the US, the tax loopholes should be shut so that government can earn some extra revenues. Folks want to sell to the US consumers so they should also pay taxes to the US government. Period!
It really seems like change is going to take place through firms representing access and delivery points such as GOOGLE..... The issue in the past and the present is control of the media..... Usually the cost of media has been the sticking point.....but this is changing with the internet..... ........................................................................................ The most important usages of the internet in the future will be stock trading , banking, education, and government..... The future is looking brighter.... This can happen.........WITH THE INTERNET........
What about all of the accountants, attorneys and lobbyists who will be out of jobs? The IRS spaghetti tax code was job security for hundreds of thousands... In reality a flat consumption tax seems most fair. I would include taxing all transactions period. no loop holes for services or leasing or interest etc. A flat national transaction tax period. To keep cash flowing inside the US implement a International Tax rate on a country by country basis. You have issues similiar to the internet sales tax issues in which people would order from out of state suppliers to receive products without sales tax. you'll need a plan to deal with this. Now if you take this a step further and go all electronic each transaction can be tax collected instantly at point of sale. Even one weeks worth of interest would be significant on an overall basis to the government agencies. I would propose amending the idea to be a flat electronic national tax in which a fixed percentage is collected and immediately remitted at point of sale to the feds, state and city. A set of premptive laws much like erisa for healthcare trumping the states ability to interfere, pile on or adjudicate and matters. If businesses opt to this form of accounting nothing further needs to be filed as their payment collection system is "certified". K.I.S.S and give all businesses a compelling benefit to change over. If they chose to remain on the existing system than they follow all of the everchanging tax codes at the federal, state and city levels. Phase out all tax credits and steer them to the national tax and payment plan. It will take a few years but can be done. Now the real problem... This tax rate will likely be much higher. Just a rough example of tax contributions of a business. $1000 in retail product sales at a 20% margin. $800 product cost $200 gross profit: $50 sales commissions. $50 admin costs Business owner net profit $100 Taxes derived: 8% sales tax: $80 Payroll/FICA/SS = 16% of $50: $8 Employee's income tax: 25% of $100 = $25 Business owner tax @ 36% = $36 On a $1080 total retail transaction the government currently receives roughly $150. The company net after taxes and expenses is $64. An all encompassing flat tax rate would need to be 10% or higher in turn raising the margins required for a business to make a profit.
Here is the point........ It is going to happen............... If we can think about it now.....this is already very telling..... ........................................................................ When all the items are visible and on the table and easy to access... Look...it will not be long before TV is delivered on the internet.... ........................................................................... This is going to happen..... Efficiency is not hidden.....and the economy will move towards efficiency if it is known.....and in this case perhaps a true democracy.............FOR ONCE...........
Clearly the amount of corporations that don't pay tax is distorted in the aggregate for all the reasons well stated here in this thread. One point not made, is that the aggregation conflates domestic Sub-S corps, One person service corps, with International Public Corporations. What they don't tell you is that the highest effective taxes are paid by domestic S-Corps which make up about 85% of U.S. Manufacturing Jobs and more total U.S. jobs than international C-Corps. This way of aggregating and ignoring the burden placed on successful domestic job producing corporations by pretending that every corporation is a multi-national, publicly traded, corporation leads to a reaction that will raise tax on the domestic corps that already pay the most tax and provide the most jobs. You go shooting at Boeing and you end up killing machine shops in Wisconsin because you don't disaggregate the bull in these sensational press releases.
I think many of us do get it, and we understand the issue in more complexity than meets the eye by such a simple and straightforward proposal for a consumption tax. This is another version of the flat tax, but one based on consumption rather than income.. The great virtue is simplicity, and everyone pays, so the underground cash economy gets taxed as well. That's a huge advantage! Unfortunately there is a compensating major disadvantage to the flat tax in all its manifestations in any society where incomes vary dramatically, as they do in the U.S. The U.S. has a serious problem on its hands which could eventually result in social discord, elevated crime rates and economic regression. Not enough capital is being left in the lower half of the middle class which is roughly forty percent of the population. In that cohort real wages are not even staying level, they are declining! At the same time income in the upper 10% of the population is increasing rather dramatically. When corrected for population in these two classes we find that the income disappearing from the bottom cohort is reappearing in the upper cohort. I have previously posted my hypothesis that the two most important causes for this disturbing trend are: 1. collapsing progressiveness and increased compression in the U.S. income tax rates -- which I learned from reading Piketty has fed the steep, and unjustifiable on the basis of productivity, rise in executive compensation -- and, 2. The compounding effect of taxing unearned income at lower rates than earned. I recently finished reading Piketty's massive study of capital flows in the Western industrialized economies and found that there is excellent support for my thesis in the economic data. In summary, there has been, in the U.S. since roughly the 1980s, an economically unhealthy redistribution of wealth from the lower economic classes to the upper classes. This should not be allowed to continue, and the best way to stop further deterioration of living standards is to bring back some of the progressiveness in tax rates by restoring at least some of the tax brackets lost in the 1980s and by raising the top marginal rate some. I don't hear anyone calling for a return to the 90% top marginal rate of the 1950s, but a top rate in the neighborhood of 50% - 60% combined with a modest reduction in the lowest brackets would probably be enough to stem further deterioration and bring real wages back in line with inflation and productivity gains. The adjustment needs to be close to revenue neutral and of the right size to produce a balanced budget. If overall revenue is to be reduced, then, of course, fiscal restraint is needed.. The problem with all the flat tax proposals, including the consumption tax version, is that they will cause the unhealthy wealth discrepancy now evident in the U.S. economy to get worse. A progressive tax is a fair tax, as is a flat tax, because everyone pays exactly the same tax rate on the same dollar earned/spent from the first dollar earned/spent through the billionth dollar earned/spent. The problem with any flat tax is that, although not unfair, it is indirectly regressive in any society where incomes differ dramatically; capital will move toward the upper economic eschelon and become increasingly concentrated there along with political power. Contrast this with a progressive tax. When the rates are properly adjusted, real income grows across the economic spectrum according to productivity and inflation. Presently we have rising productivity coupled to falling real incomes. This is very, very unhealthy for the longer term outlook.. The rates on unearned income need to be revisited as well. Lower rates on unearned income may be viewed as inherently unfair, because the rates on earned and unearned income are different for the same dollar earned. But it isn't fairness so much as the damage caused by the compounding effect of lower unearned income rates over time that demands we visit this aspect of our U.S. tax structure. I, like virtually everyone, want to see our U.S. federal taxes greatly simplified, but we must find a way to do that without destroying our economy and our society.