No More Income Taxes!!!

No More Income Taxes!!!

© David Burton 2007

Income Taxes

Income tax time 2007 has now come and gone. It has been another waste of your and my time, more waste of your and my money and a windfall for tax accountants and tax lawyers. For heaven's sake let's get rid of this albatross!

Deroy Murdock, in an article tilted, Rationale for complex Tax Code falls flat on page 17 of the April 17, 2007 edition of the Boston Herald wrote:

  • The Tax Code and its accompanying regulations and IRS rulings stretch longer than 71 Gideon Bibles stacked side by side.
  • A typical taxpayer needs nearly 40 hours to complete Form 1040.
  • The IRS estimates that a self-employed person needs more than 80 hours to prepare their return, the equivalent of a 2-week paid vacation.
  • The Tax Foundation estimates that IRS paperwork compliance cost over $265 billion in 2005.
  • Even worse - nobody knows what the tax code means! Recently, USA Today had 4 tax professionals prepare returns for an imaginary family. All 4 results were different!
  • In 1998, Money magazine asked 46 tax professionals to prepare returns for another hypothetical family. No 2 returns were the same! Calculated taxes owed varied from $34,240 to $68,912.
  • David Keating of the National Taxpayer Union has written that, "The Tax Code is so convoluted that no one inside or outside the IRS understands it."

What this means to each and every one of us is that we are wasting the time of taxpayers (that’s you and me), the resources that comprise the legal, accounting and other tax preparation organizations, and the need for the bureaucracy that we call the Internal Revenue Service (IRS) and other governmental organizations that are involved in tax collection (including preparing and updating the tax codes, investigations of tax fraud, and prosecution, etc.). This waste of resources shows up in the cost of goods and services produced (you and I pay these costs) and in the reduced competitive position of the goods and services we export because of their higher prices to cover the costs of lawyers, accountants, and government bureaucrats.

What's the solution? Let’s do away with the income tax and replace it with a flat consumption tax, such as a national sales tax or value added tax (VAT). Let’s face it. The wealthy buy more that the poor. Therefore, they’ll pay more with a consumption tax than the poor. The more a person makes, the more the person will spend and buy, and the more that person will pay in terms of taxes. You and I will stop wasting our time preparing income tax returns. The lawyers and accountants can turn their talents to more useful pursuits.

According to Howard Banks (Forbes, August 3, 1993), “in its purest form, a tax on consumption would replace the income tax and would tax only the money that people (or companies) actually spend. Left in the bank, money earned but not spent becomes a kind of universal IRA, tax-sheltered.”

In a 1994 article, Steven Forbes wrote that the elimination of the income tax code, “would redirect an immeasurable amount of American brainpower from the numbing exercise of coping with the incomprehensible tax code to more productive purposes. Forbes estimated that the savings from eliminating the federal income tax would amount to “$100 billion now spent filling out tax forms and other forms of compliance and another $100 billion wasted from investments being made for tax (avoidance) rather than economic purposes.” Eliminating the income tax, “would get rid of a profoundly corrupting influence on our political life: the countless millions of dollars now showered on politicians and bureaucrats to influence tax-related rules and legislation.”

We need to eliminate the income tax and replace it with a spending tax! At the same time, we can get rid of the thousands of pages in the current tax code and replace it with a streamlined and simplified set of rules that everyone, including the tax bureaucrats, can understand and follow.

  18 April 2007 {Article 22; Govt_05}    
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