Much of the complexity of our tax system comes from efforts over the years to make it more fair by closing loopholes. But it has become so complex that compliance, even for everyday people and small businesses, is incredibly expensive. Not only is this a waste of resouces, but in the end if encourages otherwise honest people not to comply.
Some ideas to make income taxes easier:
1. Setup the tax rates so that a very high percentage of Americans effectively pay a flat tax. The increasing tax rates, which shift the burden to those who can afford it, could come into play only for the highest earners. This would simplify withholding and computation of taxes for most--just withhold/pay the base rate. The high earners are responsible to compute and pay estimated taxes. Easier for employers. Could be applied to interest, dividends, Vegas winnings, independent contractors, etc.
2. Much complexity for small businesses comes from deducting expenses from revenues to reach net income, which is taxed. Give small businesses the option of a "standard expense rate". For instance, a small business could compute taxable income from:
Revenue - Cost of Goods - Wages paid = Income before Expenses
Income before Expenses * IRS Expense Factor = Income for taxes
No more saving receipts or explaining to the IRS why your computer is for business use instead of personal use. Of course, if your expenses exceed the IRS factor, you should be able to deduct actual instead...but expect to be audited! The IRS factor could be standard, or might be based on the type of business.
3. Make gifts and inheritances subject to income tax! Why do we tax the payor instead of the payee on these? They are certainly income. A couple of things to make that more bearable:
- each person can inherit up to $xxx from any person untaxed (in their lifetime). i.e., I get that much free from mom, and I get that much free from dad and their maid gets that much free from my mom and s/he gets that much free from my dad.
- each person can receive up to $yyy per year in gifts untaxed.
- you can always average your income back 5 years to reduce tax on spikes
4. Rather than having special rates for certain income, with bizzare phaseouts, etc, have simplier to apply formulas. For instance:
- capital gains: every person can exclude x% of capital gain income, up to $y total. I.e., you can deduct 50% of your cap gain income, up to $10,000. You could have similar formulas for interest, dividends, or anything else.
- to help simplify reporting, have an exclusion for a certain amount of miscellaneous unreported income. If you just said, look, up to $2000 of otherwise unreported income is OK not to report and pay tax on.
Comments (6)
What has this to do with open government?
how bout we just eliminate the ILLEGAL income tax completely?
Yessir! Income tax is unconstitutional --it was never ratified, just pushed on us to sign the citizenry up to pay the interest on the federal debt once the Federal Reserve act was passed in 1913. Once the gov't was forced to borrow money from the fed and stop issuing it's own debt-free money the lenders (private bank known as the FED) had to have collateral and the collateral is us! So, let's also repeal the FEd Reserve act and take back our banking system, issue our own debt-free treasury money and pay off the federal debt with all those worthless federal reserve notes. Then we won't need to levy income tax in the first place.
Go to www.webofdebt.com for more info.
Tax simplification, with something closer to a modified flat tax with very limited deductions, has another benefit... it eliminates a major source of government corruption, as companies try to buy favors, i.e. they arrange for large contributions and such in exchange for trying to get certain teax breaks. Eliminate the concept of all these tax breaks, you eliminate a lot of potential corruption, and government both appears and actually becomes more open and honest.
u.S. v Cryer- a 12-0 decision in favor of Cryer who contended that the IRS had no authority to tax his earnings. The IRS lost because they could not show how they were able to legally attach earnings.
Thus, the entire tax code is as worthless as an obama campaign promise.
See http://opengov.ideascale.com/akira/dtd/6609-4049 where you wouldn't have any bookkeeping to do and no IRS audits. You take the sum total cost of legitimate government, divide by the sum total taxpayers, and the bill to each individual would be a couple of hundred dollars each!
See http://opengov.ideascale.com/akira/dtd/6609-4049