It's way past time to Abolish the IRS

http://www.fairtax.org/

"The current Federal income tax system is broken. Patching up the existing code is pointless. It's time for a fresh approach, a fair approach. It's time for the FairTax.

Simply put, the FairTax replaces the way we're currently taxed - based on our annual income - with a tax on goods and services. The FairTax is a voluntary “consumption" tax: the more you buy, the more you pay in taxes, the less you buy, the less you pay in taxes. It's simple.

Everyone pays their fair share of taxes, and with the FairTax rebate, spending up to the poverty level is tax free. The Federal government is fully funded, including Social Security and Medicare, and you don't need an expert to determine your Federal taxes."

government systems come and go -

Only bureaucracy is eternal.

The complexity of the income tax code is caused almost exclusively by special interests seeking exemptions for themselves, and politicians trying to placate strategic groups of constituents. Knock down the harbors and shelters for the corporations and the rich, and you get a much simpler and fairer code.

That said, I think it would make administration and record-keeping much simpler if the income tax was replaced with a national payroll tax (with no pork-barrel exemptions). There are far fewer businesses to keep track of than individual citizens.

Was that the sound of a bankrupt government I heared?

Seriously, for sales taxes to equal the current tax income of a western government would require on the order of 50% on ALL goods, and probably more on so called "luxury items". How many bottles of shampoo (for instance) does it take to equal the annual tax burden of someone earning say $60k a year, for example?

I don't mean to put the idea down, but it would end up with a bankrupt government, indebted to big business... and way more under corporate control than it is now, and any benefit to the common citizen would soon vanish like lindens off a money tree...

Please note, this is all just opinion and surmise from the post... I haven't yet read the web page, but then, I don't live in the US either, so maybe what I think doesn't matter.

Disclaimers: Yes, I do work for (local) government, and no, not in a tax office - I'm a programmer for root's sake.

Addition after reading Arcadia's post... I agree that income tax is flawed as it is, in the UK too... but it can't be just abolished for a sales tax, for the reasons I mentioned. It can however be made fairer, and so I agree on that score.

According to the Bureau of Labor Statistics there are between 2 and 5 million (pick your own rows) people who would never let this happen.

Richard Dawkins coined the life/dinner principle which often applies to situations like this. Paraphrased, the rabbit will always run a little faster than the fox because the rabbit is running for his life and the fox is just running for his dinner.

Even though our horribly arcane taxes (cf. the form that even god doesn't understand) are an irritant to those who have to contend with them, a few million people who would lose their livelihoods to reform can't let reform happen.

With all due respect (seriously, not sarcastically), this is a non-example. Of course, someone's tax burden is not going to come out of one product they purchase. Thanks for taking time to resppond to my post. The whole point of this post is to get an awareness and discussion going about this topic.

I agree the fed-co tax system is archaic and broken. It caters to churches, non-profits and gargantuan corporations all of whom have loop holes galor to fondel as they fill out there yearly/quarterly tax reports. If you read it will not lead to a bankrupt govco you will see that the abolishion of fedco income tax will not cause the govt to go belly up. I am all for a penny sales tax on all goods both for state govco and fedco. That should be and would be sufficient for all the true needs of govco. Put govco on the atkins diet which would eliminate the pork and beans and you will see a happy lean govco with very happy subjects.

The US personal income tax, as we know it, was devised during the WWII era as a *temporary* means by which to raise funds for the war effort. Even back then, it wouldn't have taken a pyschic genius to figure out that the personal income tax would become ensconced in our national bureaucracy. Historically, it was never intended that the federal branch would derive its treasury from the citizenry; it's revenue streams were primarily excise and import taxes/tariffs. With NAFTA/CAFTA, the federal branch has eliminated some legitimate and primary revenue streams.

Although I think the chances are slim that the IRS and existing tax code will ever be massively reformed, I would love to see it replaced with a national sales tax. It applies to everyone -- foreign and domestic -- who buys consumer items in the USA equally and without bias. Further, a national sales tax anonymizes the vast un-washed masses. Wouldn't we all just love to gouge out Uncle Sam's prying eyes!

The way taxes are supposed to work, you tax the things that you want to see less of. Pollution, drugs, crime... etc. Bad things.

Our tax system taxes income, work, property and commercial sales. We must not want people to do or have those things.

Speaking as someone who hasn't dealt with national ecnomics since high school, wouldn't a national sales tax (which I would assume would be in addition the sales tax currently taken out) be an unfair burden on the working class citizen?

I'm not saying it is. I'm saying I honestly don't know, and would like to.

Very simplistic view of the National Sales Tax concept. First of all, it doesn't remove State Income Tax or City Income Tax. Second, the idea that the NST would not impact Charitable Giving is, I think, misplaced. Third, the Foreign Trade implications are more complex than presented on the website. Fourth...I can't go on.

This doesn't solve the root issue of the tax problem, which is Government Spending. Expense reduction can't be forced on the Government by providing less $$. Deficit creation is not taboo.

On the other hand, there are a lot of good ideas presented and I wish more open, honest discussion would take place among the Law Makers in the US. None (95%) of them really want any changes.

I've read up on FairTax... it basically allows enormous loopholes for the rich, and places the burden squarely on the middle and lower classes.

This proposal is utterly one-sided and doesn't mention the simple fact that rich people already have a system in place of giving large items as part of salary that, under this B.S. "FairTax" would avoid taxation. Don't want to pay tax? Invest your money in a business, which is not spending and which avoids taxes, and you'll earn interest. Tax free.

Although I'd love to see the IRS overhauled and run like a business instead of a bloated pig.

I completely agree. I'd be all for this.

Having "only a sales tax", if I understand it right, would still get red taped like crazy.

Besides, there's gonna have to be a DAMN good argument for that kind of change. That's absolutely not encouraging people to spend, it's encouraging them to be cheap and to save. It sounds like it'll drag our economy down into a disaster. You'd probably have corporations (not to mention, probably everyone else) buying crap overseas and shipping stuff over. Ya, might be nice to the shipping industry... Might end up with retail monopolies since half of them would probably go under.... just a guess though.

And....it'd probably be great for IT too. Think of all the software that would have to be altered to handle such a big change...hehe.

I love the IRS! I got a whole dollar back this year on my taxes. Fear my refund!

Sales tax place an unfair burden upon middle-and-lower class folks.

If you're making 100k/year, a 6% sales tax on your weekly items purchasing isn't much... perhaps $50.00 if you're spending a lot that week, which is a negligable part of your thousands of dollars a month you're raking in. It's chump change.

But that $50.00 is worth a lot MORE to someone pulling in $15,000/year; people living paycheck to paycheck, working at Walmart, making barely more than minimum wage.

Guess which group has more people in it? Hint: they don't drive BMWs.

Poorer folks aren't paying income tax as it is (most of it is given back at the end of the year), so shifting it to be entirely salestax based is going to increase the sales tax to make up for the shortfall in revenue, thus hurting them more and affecting rich folks less.

The poor get poorer, the rich get richer.

Think of something else.

LF

Yes...

It's a crappy idea!

Make corporations actually pay taxes by closing all the loopholes and our problems would be solved. Not that that's ever going to happen. I just want something simpler than what we have. As a self employed person the amount of shit I have to go through in order to give half my money away to the government is absurd, especially considering that I paid MORE tax than Enron the year before it collapsed. That's insane. At least with a national sales tax there would be no paperwork and no tax code that requires a phd in quantum dynamics to understand.

If you buy a BMW under Fairtax, presumedly, you are paying more in sales tax than the person who bought a Kia. If you buy a yacht, you are paying more in sales tax than the person who can't even afford a yacht, much less the gas, insurance and associated sales tax for gas for said yacht.

As someone at the middle to bottom end of the payscale (I'm one of those poor that get poorer), I would have more money available to me under FairTax every week for spending/saving/investing even if they taxed every single item I consume (electronics, food, data, services, etc) and taxed at a rate 25%. Under the current system I get most or all of my -income- tax back, but none (or almost none) of my state, local, fica, or whatever other various HUGE bullshit taxes that have been tacked onto my paycheck. They amount to about a quarter of my total income. Further, if I can't keep track of my state or local's changes to their forms, I can expect to pay a penalty. Also, when I do have to change jobs, I can fully expect the whole process to get all messed up even more.

Will uber rich people have more money freely available? Maybe, but it's not like they weren't going to hide it from our current system (and alternative upgrade) anyway. This way if they consume anything they pay back into the system. Currently they can avoid that numerous ways, including 5 states that do not tax sales. I'd love to see all the various non unified tax systems go away to be replaced by a singular federalized sales taxation system, either administered federally or just guidelines set up federally and administered locally so that all the sales tax are the same everywhere in the US. That would make internet shopping easier as well. Currently, you can't collect or ask for out of state sales tax.

I don't see the downside to never having to file forms, essentially in triplicate (one for local, one for state, and one for federal) ever again. That'd be pretty sweet.

A quick, superficial appeal of the idea is that everyone would get taxed at the point of sale, as someone already mentioned. Wouldn't matter how I got my money...inheritance, pushing crack, sweat of my brow...if I popped for The Big Shiny Thing With Power Windows, Uncle Sam would get his share.

But...would taxes hit only at the point of transferring a consumer-ready item, or at every step in the supply chain? Given the number of transfer points for raw and semi-finished materials in the production of even moderately complicated consumer electronics, it looks to me like cars and computers would wind up costing a trillion dollars apiece...


-- jj

I suspect some companies would merge with their suppliers to become mega corporations that control every aspect of manufacturing a given product beyond acquiring base metals and organics. Thus they would avoid increasing the prices of their goods.

Also a modest increase in price of goods won't impact the final saleability of an object if everyone has more immediate money depending on what the final tax on the item is. I will admit that if the tax at every point of the supply chain is something like 25%, the final product could be very expensive for something like a car. However, if it's only 5% at every step and there are some 4 steps for each component before you buy a car, it would still be manageable and better than what we have now.

Also consider that a lot of our manufacturing industry has been outsourced to other countries. So our economy has moved more toward services rather than manufactured goods (even though we still do much of that). Services largely wouldn't have to deal, as much, with supplier side sales tax as they don't require huge amounts of supplies beyond office equipment.

What...corporations never do that kind of thing.. stop spreading lies!

hahaha... I couldn't type that without laughing out loud...

Pardon my ignorance, but if I'm reading the proposal right, then where, exactly, would I get more immediate money from?

I'm a college student. As it stands, I pay zero income tax (my income is too low, I get it all back). How exactly would I benefit from a major price hike of everything I buy? It would be harder for me to "climb the socio-economic ladder" if every week I'm paying 30% more of my wages for stuff I absolutely need to live. Multiply me by the millions of current-and-soon-to-be students in the same situation, and suddenly you have a generational economic dead end; we can't get any higher up, so we can't get better jobs/education, ergo there's no need for BMW to sell cars here. Good bye, jobs.

LF