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An Alternative to Income Taxation (1 Viewer)

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fjf1329

Taxing a persons income has always been an idea that has "stuck in my throat" so...


An Alternative to Income Taxation


If the average citizen were asked what qualities they would like to see in a method of taxation most would agree that it should be simple, transparent and fair.


The income tax is complex, requiring hours of time and for many, additional expenditures to hire professionals to comply with the tens of thousands of pages of law and regulation. When first imposed in 1913 it represented a modest tax on the income of those making over 300,000 dollars a year adjusted to “to-days” dollar. Since it’s inception it has increased in how much it takes, and has grown to include every worker. In 1942 the Congress passed legislation to authorize withholding of taxes, ostensibly to help fund World War II. This obscured how much a person paid, and made increasing taxes easier. Over the years layer upon layer of regulation has bloated the tax code. Questions directed at “experts” elicit different answers from each. The people that the government is supposed to serve are seldom if ever made aware of new regulations enacted at the behest of lobbyist for special interests. It is only after the end of a calendar year that we sweep our bills, receipts, w-2’s, bank information, and tax forms into a sack and spend hours of preparation figuring out what new hoop to jump through, sometimes at considerable cost, that we find out how much our taxes will cost. Oh yes, better not be late, because there is always penalties and interest.

The income tax is not transparent. It is replete with hidden taxes and compliance costs.
Businesses are required to pay taxes that are then hidden in the cost of the products and services they offer, placing an additional burden on the taxpayer, one he doesn’t know he is paying. They are also required to meet stringent and complex regulations and the cost of complying with these regulations is also passed on in the price of goods and services as a cost of doing business, and once again the unwitting public pays the price.
The withholding of taxes is another opaque layer of regulation. Many people discount the amount withheld from their wage, and believe they have paid “no taxes” when in reality they have paid thousands of dollars.

The current tax on income places a disproportionate burden on the middle class. The wealthy have the ability to avoid income taxes by using offshore financial centers and other tax shelters. The indigent pay no taxes. Those whose income is the result of illegal activity such as drug dealers, illegal gamblers, racketeers, fences, prostitutes, white collar criminals, etc. declare no taxable income, and those engaged in cash businesses often do not declare all their income. There is no accurate estimate of how much money is escaping taxation by these means, however some estimate that a trillion dollars of taxable income is lost. Let me pause here to try to place a trillion dollars in perspective. If you want to accumulate a trillion dollars you would have to save a million dollars a day for two thousand eight hundred years. In order to have it today you would have had to start saving 800 years before the birth of Christ!


The sorry fact of the matter is that if you paid taxes this year, you probably paid your taxes and the taxes of another because 50% of the taxpayers in this country pay 97% of the revenues collected. The income tax has grown like “Topsy” since 1913. Today it is a combination of law and regulation that has expanded to tens of thousands of pages. It is a broken system, and it is time to rip it out by the roots and replace it with something simple, transparent and fair to all.

A consumption tax will do exactly that. The Income Tax could be replaced with a revenue neutral national sales tax that would be applied one time to new products and services at the retail level.

A national sales tax would mean that there would be no taxes on salaries, so you would go home from work with your whole paycheck. It would eliminate all taxes on income and investments including, capital gains tax, estate tax, tax on interest earned, IRAs and other retirement accounts, etc.

It would eliminate all taxes embedded in the products you buy therefore prices at retail will fall as taxes and compliance costs are eliminated as overhead items. It will make
products cheaper for people in other countries improving our balance of trade. It will capture monies currently going untaxed, because those evading taxes by illegal occupations buy goods and require services. It would be transparent. When a person goes out and buys an item the amount of tax paid will be on the receipt. It will be far easier to understand just how much money the federal government takes.


It would be fair, protecting those below the poverty line by ensuring that there would be no taxes paid on the necessities required to live with dignity. There will be no need to hide income in offshore financial centers and other income tax shelters used by the very wealthy. Each person will decide how they wish to spend their money on new goods and services, and when they spend, they will be taxed on the expenditure, very much the way the State of Florida, Texas and five other states run their governments.

Once enacted this system of taxation will change the way we live. The vast majority of citizens will find themselves with greater opportunity to achieve their goals. Increased
disposable income translates into enhanced opportunity to qualify for a mortgage, start a business, or decide to give up a job to stay at home with one’s children. The next generation of Americans will be less dependant on government assistance in their old age, and most of the “K street” lobbyist can look for another job, because there will be no income tax code for them to manipulate at the expense of the average taxpayer to create an advantage for a special interest.

The National Sales Tax is an idea whose time has come. It fulfills the need for simplicity, cost effective collection, transparency, and equality. It will stimulate investment, and saving. Social Security, and Medicare, currently in danger of collapse, will be funded far into the future.
 

americanwriter

Senior Member
These paragraphs are still a bit light on content and need to be filled out and there are grammatical issues to be dealt with, which I didn't address. It's a good topic and you can do a lot with it. IMO -- I'm for the national sales tax. It might help us to rethink our overall structure and effect some good changes in how we manage the country's finances, and provide a more stable financial base for our country. Good luck to you with this.

Taxing a persons income has always been an idea that has "stuck in my throat" so . . .

An Alternative to Income Taxation

[Revision]
If the average citizen were asked what qualities they would like to see in a method of taxation most would agree that it should be simple, transparent and fair. [And? I would bring your next paragraph up here. -->] The [present] income tax [system] is complex, requiring hours of [preparation] and, for many, additional expenditures [for the hiring of professionals trained to interpret and apply the thousands of pages of law and regulation to an individual's tax return.] This has not, however, always been the case. [Segue to your next paragraph on its history. --.]

When first imposed in 1913 [only a] modest tax on [citizens earning more than $]300,000 annually was applied. In 1942 Congress passed legislation authorizing income tax withholding, ostensibly to fund [war efforts]. [When the war ended, instead of being eliminated, the witholding taxes remained in place, and monies were added to government coffers to fund other programs and services]. [Individual income tax assessments were obscure and tax increases became easier to pass. Each year, new legislation regarding taxation was put into place]. [New paragraph here]

Over the [decades], layer upon layer of regulation has bloated the tax codes. Questions directed at “[tax] experts” often elicit different [interpretations] from each. The citizens, whom the government is supposed to serve, are seldom made aware, in advance, of new regulations enacted at the behest of lobbyists for special interests. It is only after the end of a calendar year that [citizens] spread their bills, receipts, w-2’s, bank information, and tax forms [onto a table] and [sit down to] spend hours of preparation, struggling through the codes in an effort to determine what they owe. It is then they learn, in hard dollars, what the special interest groups have been up to in government.] [The learning curve is short] and time is of the essence, as financial penalties and additional interest accrues against those who delay too long in filing and paying what is owed.]

The [present-day] income tax [system] is not transparent. It is replete with hidden taxes and compliance costs, [and it places a] disproportionate burden on the middle class. [Businesses are required to meet stringent and complex regulations and the cost of compliance is passed on to individual taxpayers, hidden in the cost of the products and services they offer.] The wealthy avoid income taxes by [utilizing] offshore financial centers and tax shelters. The indigent, and [those making less than $9,000 a year], are not required to file tax returns. And those whose income is derived from illegal activities, such as drug dealing, gambling, racketeering, prostitution, fencing of stolen goods, and white-collar crime declare no taxable income. [And let us not forget] those involved in cash businesses, who often do not declare all of their income. There is no accurate estimate of how much money is escaping taxation by these means, however some estimate that a trillion dollars of taxable income is lost [each year]. Let me pause here to place a trillion dollars in perspective. If the average citizen want to accumulate a trillion dollars, he would have to save a million dollars a day for 2,800 years. In order to have it today, he would have had to have started saving 800 years before the birth of Christ!

The [bottom line is] that if you paid taxes this year, you probably paid your taxes and part of the taxes of another citizen. Fifty percent of the taxpayers in this country pay 97% of the revenues collected. The income tax, [post 1913, has become top heavy with regulation and financially punitive to the majority of middle class citizens.] It is a broken system, and it is time to rip it out by the roots and replace it with something simple, transparent and fair to all. A consumption tax will do exactly that.

The [present system should] be replaced with a revenue-neutral national sales tax applied one time to products and services at the retail level. A national sales tax would [eliminate income tax withholding, increasing the spendable income of citizens.] It would eliminate all taxes investments including, capital gains tax, estate taxes, taxes on interest earned from IRAs and other retirement accounts. It would eliminate all taxes embedded in the products purchased. Retail prices would fall as taxes and compliance costs were eliminated as overhead items. It would make products cheaper for people in other countries, thus improving our balance of trade. It would capture monies currently going untaxed, as those evading taxes by illegal occupations buy goods and require services. It would be transparent. When a person went out and bought an item the amount of tax paid will be on the receipt. It will be far easier to understand just how much money the federal government was taking in. [A national sales tax would be fair,] protecting those below the poverty line by [lowering the costs of consumable goods needed to ensure] a dignified life. [The wealthy would not gain from hiding monetary assets] in offshore financial centers and other income tax shelters. Each person is left to decide how they wish to spend their money on goods and services. The states of Florida, Texas, Nevada, Wyoming, Alaska, South Dakota, and Washington operate a modified version of this system now, having no state income taxes, and in the case of South Dakota no personal property taxes. They have shown that retail taxation as a means of generating state revenue for services and programs can be profitable as well as beneficial to their citizens.]

Once enacted a national sales tax will change the way we live. The vast majority of citizens will find themselves with greater opportunity to achieve their goals. Increased disposable income translates into enhanced opportunity to qualify for mortgages, start-up capital for new businesses, and an opportunity for two-income families to become single-income families, allowing one of the wage earners to return home and care for minor children and aging parents.] The next generation of Americans will be less dependant on government assistance in their old age. Most of the “K street” lobbyists, of course, will have to look for other jobs. [There will be] no income tax code for them to manipulate to the advantage of the special interst groups and to the detriment of the average taxpayer

The National Sales Tax is an idea whose time has come. It fulfills the need for simplicity, cost effective collection, transparency, and equality. It will stimulate investment, and saving. Social Security, and Medicare, currently in danger of collapse, will be funded far into the future[/QUOTE]
 
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archer88iv

Senior Member
In light of recent events I would go out of my way not to mention Texas and Florida as examples.

...don't take that the wrong way. I live in Texas and like the tax system here; I just don't think it's going to make for an effective argument.
 
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fjf1329

I mentioned Texas and Florida because they both are growing states with large economies and neither have an income tax. I originally wrote this for a newspaper in Florida so the audience was familiar with the tax structure here. In Florida we are currently fighting to eliminate property taxes and replace them with a sales tax increase. This is another sore spot. Property taxes are merely government
leases on one's property.
 
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