Everyday we hear about someone who avoided paying their taxes or a company that generating billions and billions of dollars in gross revenues and paid zero taxes when their tax returns were filed as required by law. Fixing an out of date tax system could be easy if both parties sat down to work on simple solutions instead of adding more and more regulations to the tax code.
There are hundreds of thousands of loopholes which are made available to special interest groups (donors, friends, and friends of friends) who infiltrate our elected officials offices with demands for special exemptions they need whatever they may be.
Since those special interest groups seem to have power over our representatives we need a level playing field so everyone pays their fair share as often stated by this administration. Currently our tax code contains over 13 thousand pages of rules, descriptions and graphs according to the US Government Printing Office. The average taxpayer will spend about 16 hours completing the schedule 1040 regular tax form at an average cost of $270.00 according to instructions on form from 2012.
The US Census released their estimated report on US retail and restaurant sales for the month of February on March 13th up from the same period last year by just over 1%. The $421.4 billion spent is at an all time high even in a bad economy. With the auto industry our nation spent another 78,466 billion, furniture and home furnishings at 8,019 billion, sporting goods another 7,751 billion and grocery stores added another 48,233 billion.
With the current tax codes and all the loopholes associated with it the system has become riddled with corruption under the guise of fairness. Over 50% of those employed pay no tax at all at one end of the spectrum. At the other end we have large corporations that make billions and pay little to no taxes leaving the burden on the middle class paying a larger percent into the system.
According to the IRS those who make between $100,000 up to $500,000 pay 45% of all taxes collected. There needs to be a change to the tax code and here is one idea that will create fairness to all with no special interest, no perks to friends and the tax code will be less than 10 pages of instructions and forms.
Currently revenues are 2.4 trillion dollars which can not pay all our expenses as we continue to accumulate a higher and higher national debt. In a matter of months it will surpass the 17 trillion dollar mark. With that said we first must control our spending problem in Washington then we can solve the tax issue.
Let's do away with the tax on labor since that was enacted to pay for the war back in 1913. Conservatives never thought states would approve the 16th Amendment however one state legislature after another ratified the new effort to tax labor, and on February 25, 1913 the income tax became law yet less then 1% of those earning income paid into the system because of tax breaks, exemptions and special deductions.
Replace the income tax with a consumer tax at the retail level where everyone pays the same rate at 8% on all new products sold. For corporations the tax rate would be at a flat 10% filled out quarterly. Each would generate more revenue for our national coffer and to be sure the funds get deposited enact strict prison sentences for those who attempt to cheat the system by skimming or other shenanigans.
With 8% revenues generated at the retail level there would be an average of 75 billion dollars collected each month barring any recession or depression. Those individuals who work for cash because they hate the IRS taking their hard earn dollars will pay now as they buy their needs. The businesses working for cash will have no other choice but to send in the 8% tax which will be a deposit each day, work or month depending on size of business.
At the corporate level for the past 12 months the average gross sales have been 1.25 trillion dollars. Of that over 700 billion dollars would be taxed creating approximately 70 billion dollars in revenue each month. Added together the revenue taken in would be 155 billion dollars each month or 1.74 trillion dollars which is 200 billion more than individuals and corporate pay in currently.
With this system the loopholes are eradicated. No special interest, no perks no unnecessary deductions corporations currently use. Simple and effective with fairness for everyone. Let's have this conversation in the Halls of Congress.