The U.S. Tax Code

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Guys, there's something I need to get off my chest right here and now: The American tax code is one of the MOST confusing system in the world.

I will be frank: I'm pretty tax-illiterate. Mostly because our tax system is a patchwork of various and confusing facets, that I cannot even understand. That's all I can say about this subject.

Anyone want to say something about this?

The tax code is not written to establish a system of revenue generation and collection.

It is written to establish a system of political control of the masses.

We could get all the revenue we need by setting 1-3 tax tiers for certain types of activities (e.g., income, investments, imports) and letting that be that.

However, complex and ever-changing tax rules allow government to put people in positions where 100% compliance isn't possible, and if they want to "bring the hammer down" on anyone, they only need to go in with agents, confiscate files, seize accounts and spend MONTHS looking for any excuse to bring criminal and civil charges against a person.

Pretty simple.

In grad school I had the opportunity to study the U.S. Internal Revenue Code with a great tax attorney and CPA. He concentrated on giving the historical background that explains why each of it many, many convoluted provisions came into being. It was fascinating.

My take-away from those courses were: At it's core the IRC itself is a straight-forward graduate tax scale based on income. Things get interesting when additional provisions are added, often with noble purposes of aiding families or promoting economic growth. (E.g. deductions for mortgage interest, dependents, low income tax credits, capital gains.) People then find every way imaginable of abusing the tax-reduction provisions, so additional provisions are put in place to close the loopholes. And at that point begins the downward spiral into the convoluted morass of insanity that is the IRC today.

That is just my view; it helps me manage my frustrations whenever I have the misfortune of dealing with our Internal Revenue Code.

From the little I've read, it seems no one's actually gone through the existing Tax Code in years, maybe even decades. There's thousands of pages in that thing, and every time a change is done, its just tacked on like a Post-It note. Most forms of taxation in the U.S. were illegal before WW2, though.

^ The question now becomes, how do we revise, simplify and update it for the 21st century?

A proposal I like is to flip the system around to a Progressive Consumption Tax.

http://www.nytimes.com/2011/09/18/busin ... d=all&_r=0

This is just a clip, the full article is worth reading.

Scrapping the current progressive income tax in favor of a more steeply progressive tax on consumption is probably the single most productive change we could make.

What’s a progressive consumption tax? First of all, it’s not a sales or value-added tax, neither of which takes individual income into account. Those taxes are imposed on the spot when someone buys a good or a service.

Under a progressive consumption tax, taxpayers would report their incomes, much as they do now. They’d also report their annual savings, much as they do for tax-exempt retirement accounts. The tax would be based on “taxable consumption” — the difference between their income and annual savings, less a standard deduction of, say, $30,000 for a family of four. Rates on additional expenditures would start low and rise gradually with taxable consumption.

Because savings would be tax-exempt, the biggest spenders would save more and spend less on luxury goods, leading to greater investment and economic growth, without any need for government to micromanage anyone’s behavior. Consumers in the tier just below, influenced by those at the top, would also spend less, and so on, all the way down the income ladder. In short, such a tax would attenuate the expenditure cascade that has made life for middle-income families so expensive.

https://en.wikipedia.org/wiki/FairTax

Why not scrap the majority of the IRS and not have to deal with this income-reporting anymore, anywho?

I will say this: Get rid of taxing winnings on lotteries, game shows, the like in this country.

I say either go for the sovereignty tax or fair tax. What is the first? Simple. Tax the states based on usage of governmental services, and how they come up with the money is however they decide. The people there want state enterprises? K. Do They want a flat income tax, go for it. It allows for states to test different styles of governance, while allowing for more competition at the federal level because it still gets it's share, but it allows for development of states that are more fiscally prudent, and encourage for the states to be prudent.

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