Bye-Bye to the Internal Revenue (Dis)Service

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While reading the IRD website, I learned this about the IRD Commissioner:

Douglas Shulman became the 47th Commissioner of Internal Revenue on March 24, 2008. He presides over the nation's tax administration system, which collects approximately $2.4 trillion in tax revenue that funds most government operations and public services. He manages an agency of over 100,000 employees and a budget of approximately $11 billion.

Not in our best interest

Spending $11 billion of our money for a service we do not need or desire is shameful. Why do we need the IRD for collecting the $2.4 trillion? We don't!

It would be a simple procedure for merchants to collect federal taxes from purchasers just as, in most states, they collect state sales taxes. The merchants could collect upon sale and remit the total dollars collected to their state for disbursing to the federal treasury.

Here is a list of twelve advantages a well developed national sales tax program, with collections from individuals only - not businesses - at the retail level has over our federal income tax system.

Giving the people $11 billion to spend annually on the people’s needs.

Saving the people the stress of keeping records for tax purposes.

Saving many of us from paying others to prepare our tax returns.

Eliminating the underground economy wildly estimated at $400 billion to one trillion annually. For example, drug dealers could not evade paying taxes when buying their Cadillacs.

Our government would have less information about us. (Yeah!!)

It would be fair because the rich and poor alike would pay the same rate, thereby no longer penalizing the rich for their good fortune, weather earned or inherited.

Businesses would pay no taxes and therefore no longer need to build taxes into the price of the goods and services for consumers to pay.

No more grief, inconvenience and cost of going through an IRD audit.

No more abuse and bullying from the IRD.

We will no longer need to cover those who falsify their tax returns.

Each one of us can have closer control over the taxes we pay by adjusting our buying habits.

By paying taxes as we go, the tax bite will be foremost in the minds of wage earners instead of “invisible” due to wage withholdings, creating greater day-to-day awareness of the cost of running our government.

Politicians have pitched the sales (consumption) tax line for years. Their proposals make no sense at all. Why? Because they want to give different individuals different treatment because of their special circumstances which shifts the wealth of the wealthy to the less wealthy.

Wrong! Wrong! Wrong!

For example, they talk about giving some type of tax credit to the poor as a way of offsetting the sales tax. Too, from my research, each of the different suggestions provide for the capturing of personal information from each individual which will no doubt, in time, lead to a system as botched up as we have now.

I much prefer a sales tax with absolutely no personal information gathered and with relief built in for the poor. You can read in detail some of the different suggestions from senators and representatives at taxprophet.com, which was in place as recent as January 16, 2009.

Regarding the poor, I suggest we exempt certain items from tax for the benefit of not only the poor but for the benefit of all. Why not, for example, exempt tax on items such as food and household staples? Why not exempt tax on vehicles more than four years old? Why not exempt tax on use clothing? You get the idea.

These exemptions will, to use a term I like to avoid, level the playing field. The socialistic notion of shifting wealth of the rich to the poor by a taxing method should end. This approach will help arrive at the end.

When will we achieve this? The answer is never as long as we have a large number of buffoons in congress who value their backsides more than they value the best interest of all the American people. Do you think our honorable congress men and women want to battle the 100,000 IRD employees plus those earning a living from working within the federal income tax system? I don’t either. But, they wouldn’t have too.

The quick and easy way of taking care of the IRD employees is to buy them out. Why not pay each of the 100,000 employees $100,000 in a lump sum. That’s a total of $10 billion, less than the current annual IRD budget. Of the $10 billion, those employees would return perhaps $2 billion to the treasury in the form of sales tax, depending upon the tax rate - which some politicians estimate to be 20% of the cost of purchases. Too, the $2 billion will be impacted by the economic multiplier effect.

Or, if a better way exists, such as buying out the IRD employees based on years of service and salary, then let’s get it going. But, it is important not to slight them. It isn’t their fault they got caught up in the mess. After all, they were just looking for work like any other great American. By the end of the second year, there should be no further expense incurred for phasing out the IRD.

The Private Sector

Now, you might ask, “What about private sector tax preparers?” Many CPAs prepare federal income tax returns part time (January through April) and will survive by concentrating more effort on other opportunities for which they are trained. Tax-preparers only employed on a seasonal basis will lose that portion of their income. However, many have other income, such as full-time employment or investment income, perhaps both. Those people should have to make only minor adjustments to their lifestyles.

The Government's Purpose

After all, it is the place of our government to employ people for the sole purpose of satisfying our common needs, not wants. It isn't the place of our government to created unnecessary jobs. And, it isn’t the place of our government to pay 100,000 people to collect taxes because - as we have heard time after time - that‘s the way it has always been. A government is negligent when it creates, or when it allows, a situation detrimental to its citizens.

Remember these points even if you take nothing else away from this reading:

Every income tax deduction and credit given to one tax payer is paid by others.

Every dollar a person gains by evading taxes is paid by others.

Every dollar a person saves by utilizing an income tax loophole is paid by others.

If you are the person “benefiting”, then others pay what you don’t pay. It follows, then, that you pay a share of what others do not pay whether by taking deductions, getting credits, evading taxes or by utilizing loopholes.

Sure, we will need to administer social security taxes and federal unemployment compensation taxes. Employers would continue collecting those taxes with remittance to the federal treasury.

Speak up and Demand

It will take more than just hoping for action from our business-as-usual and status-quo congress for us to achieve a respectable tax system. It will take more than merely grumbling to those with whom you work. If we don’t demand such a change, we will get what we deserve - you know, continuing the way it has always been.

How about it? Bye-bye to the honor system!

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