The Case For Tax Reform

The United States Income Tax Code is an incomprehensible 400,000 pages in length. But beyond just being astoundingly complex, and an abusively inefficient waste of personal time and human life, it is also a horribly intrusive and unnecessarily invasive way of trying to raise revenue.  

There are simply other means, and other alternative methods for raising revenue that would be so much better than this Income Tax, and that would greatly, greatly simplify all of our lives (and therefore improve them).

In addition, all the Income Tax system does is create a counter-reaction, by the rich, of trying to devise tricks for escaping the payment of the taxes (loopholes).  So this type of a system inevitably drifts towards corruption and inequity to begin with.  The rich will use lawyers, tax shelters, and other tricks and gimmicks to bypass the system, while the middle-class gets stuck with the bills.

Below is an argument made for Tax Reform:



From the Left



From the Right

A National Sales Tax is a great alternative to the current 400,000 pages of crap, and contrived confusion that we currently suffer under today.

  1. It’s totally transparent (there’s no mystery here about how much tax people are paying, or who is doing the paying, and who isn’t).
  2. There’s no way to cheat the system (no lawyers, accountants, etc. needed).
  3. There’s no risk of being audited, having your privacy exposed, going to jail, worrying about penalties imposed by the I.R.S., etc.
  4. There are no forms, no work, no waste of personal time, no saving all your records, no effort, etc.
  5. It’s inherently fair: If you buy a lot then you pay a lot. If you buy a little, you pay little — makes sense.

I have heard the argument raised before by well intentioned progressives who claim that this is bad for poor people because more of the percentage of their income would be taxed than the percentage of the income of someone who is rich.  Keep in mind, however, that the rich people are the only ones who are buying lots of stuff (not the poor), so only they will be the ones paying any significant amount of taxes anyway. And with no payroll-based deductions stripped away from your paycheck anymore, now the poor and the middle class will keep more of their income, and have a much fatter wallet to take into the World with, than they do under the current system. So yes they are better off. They even now have control over the amount of taxes that they pay (based upon what they choose to purchase).

But even that “percentage” issue too can easily be addressed.  Since the poor don’t buy much of any luxury items, and spend most of their money on just basic necessities like FOOD (and rent), then what you can do is just simply exempt FOOD from the tax, or have the food items taxed at a very, very low rate (take your pick).

The very liberal/progressive ex-Senator Mike Gravel proposed a National Sales Tax (“Fair Tax”) in the 2007-2008 Presidential debates.  Ironically, so did Republican Mike Huckubee. Over the course of history, politicians from both parties at various times have proposed moving in this direction.  But we have never had a President, or a House Speaker, or a Senate Majority leader ever take up the issue.

But it is the rich and the well-connected here who don’t really want the system to change. They’re the ones who have the disposable money at hand to just hire a bunch of damn lawyers and accountants to “figure it all out” and get around the whole system.  Meanwhile, the middle-class is stuck trying to read totally incomprehensible forms of absurdity and contrived madness, and stuck worrying about saving all the bank records, and receipts, and god knows what else just in order to be economic slaves to an authoritarian and Orwellian form of taxation — that just isn’t even necessary to begin with.

That’s why the original U.S. Constitution made it illegal for the government to collect taxes on wages, and to have their paws on your paycheck.  Once you go down that road, the only difference between that and slavery is that….they don’t also have to feed you, or house you as well. And, in addition, when the original Income Tax was setup, it was only intended to apply to a minority of the population at the time. But it has been used and abused as the means by which Government can start Wars, and spend Trillions of dollars overseas, and meddle in Foreign lands because the Tax Forms can always be tweaked, and the system is so complex that no one can possibly follow all the manipulations (worksheets, tables, deductions, credits, extra forms, etc.). It just gets more and more complex each and every year that passes.  This is just not a way to run a Country.

So, it is long past the time here to abolish the 400,000 page I.R.S./Income Tax wasteland of corruption and abuse, and replace it with a simple, elegant, efficient, transparent, and Fair consumption-based tax.  No one can cheat that (you pay when you buy), there are no audits to worry about, and no lawyers/accountants are ever needed.  You can instead be watching baseball games in April, instead of burying your nose in Tax forms, and receipts — while watching the rich just get around the whole system.

With a National Sales Tax law, you can also then get rid of the I.R.S. And by getting rid of the I.R.S., that enhances personal privacy, dignity, and freedom, and saves the U.S. Treasury a whole lot of money.

12 comments

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  1. End the Wars.

    End the I.R.S.

    Reclaim your privacy and freedom…

  2. I have heard the argument raised before by well intentioned progressives who claim that this is bad for poor people because more of the percentage of their income would be taxed than the percentage of the income of someone who is rich.  Keep in mind, however, that the rich people are the only ones who are buying lots of stuff (not the poor), so only they will be the ones paying any significant amount of taxes anyway. And with no payroll-based deductions stripped away from your paycheck anymore, now the poor and the middle class will keep more of their income, and have a much fatter wallet to take into the World with, than they do under the current system. So yes they are better off. They even now have control over the amount of taxes that they pay (based upon what they choose to purchase).

    This is not the point and not the argument – you are making an argument that doesn’t really EXIST.  The point is that the progressive income tax charges a higher percentage, not based on someone having a little income and paying less versus someone having more income and thus paying more.

    A sales tax is FLAT by nature.  If it were like income tax, what would happen is that people who buy more would pay a higher PERCENTAGE of tax on their purchases than would poor people on their purchases.

    It is this manner in which a flat tax like a sales tax is REGRESSIVE.  By nature it makes poorer people pay the same PERCENTAGE of tax on their purchases that rich people do.  

    To oversimplify it using the evasive argument that “the poor buy less” is to play games with basic arithmetic.  By adopting a static percentage sales tax system the poor, in a system that was equitable, would pay more than the rich in terms of the basic concept of progressive taxation.

    Moreover, this entire argument is entirely benighted.  Simplification of the tax code does not require throwing out the progressive tax and putting a simpler (but much more punishing to the poor) tax system in its place.  The argument is that the rich get away with a lot by exploiting loopholes.  So, rather than fixing the problem which is loopholes, the argument is to again benefit the rich by throwing out the baby with the bathwater and starting over again?

    In whose universe is this fair or equitable?  You don’t reward people who are defrauding the American public and taxpayer.  People who are poor spend the greater part of their income on goods that are taxed.  The rich can afford to shield their income from taxation in a sales tax based system by not spending the majority of their money and using it to make more money (for example in the things they do) — so in the end, money they invested would have no net tax burden whatsoever, assuming their investments paid off in the return amounts that the sales tax would have had.

    It’s not that the poor are buying less stuff.  This is a dishonest argument.  The argument is that the majority of a poor person’s entire income goes to things that are taxed, whereas a rich person’s does not have to.  A national sales tax would be a vast boon to the rich, and a punishment to the poor, especially assuming you develop any kind of national sales tax that is revenue neutral.

    The solution to rich people not paying their fair share of taxes is not to adopt a national sales tax and reward their tax evasion.  It is to get rid of the loopholes and force them to pay their fair share.  To simplify the tax code does not require making poor people suffer and bear yet more of a burden they shouldn’t have to, because the rich do everything they can to get out of their obligations.  

    • jamess on April 20, 2010 at 2:13 pm

    the way things “used to be”

    at the upper Tax Rate  

    (before the days of “Welfare for the Wealthy”.)



    (Click for Larger Image)

    Historical Income Tax Rates for the Top Tax Bracket — with Charts

    by jamessDec 27, 2009

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