Subject: Replacing the Tax Code
Comment: It shouldn't take a member of Mensa to see that (a) the current tax code is impossibly complex, and (b) any "reform" of the current code will simply band-aid the problem, and eventually result in the same condition we now experience. The only prudent way to "reform" the system is to eliminate the existing code and move to a consumption-based system. The "Fair Tax" bill, HR25, would do exactly that. By shifting the tax to the consumption side, several benefits are realized:
1) ALL new purchases generate a tax, regardless of how the money was earned, thus eliminating a major portion of enforcement.
2) The so-called "underground" economy is fully taxed.
3) The enormous burden on the economy of complying with the current code is eliminated, as well as helping to reduce the federal budget by eliminating a major government agency. This elimination would, of course, primarily be by attrition, since some ongoing collection activities would still be needed, and the new consumption tax would still require some manpower to maintain.
4) Corporate taxes and employer-portion of payroll taxes would be eliminated, other than tax on new purchases, thereby immediately reducing the cost of manufacturing, which should result in price adjustments that would offset the consumption tax.
5) Poverty-level families would pay little or no tax due to the monthly tax-adjustment provisions of the Fair Tax.
6) This method of collecting revenue for the federal government is more in line with the wishes of the founders, and indeed, the 16th amendment to the Constitution could be eventually rescinded, placing the Constitution closer to original intent.
7. The consumption-based tax would make America more competitive, due to the lower cost of manufacturing, particularly on the labor side.
8. Compliance and administrative costs would be drastically reduced, partially to the reduction in federal employees as already mentioned, but also because most states already have tax collection procedures in place.
9. Finally, nothing is simpler!
In short, if we are really serious about reforming the tax system to make it more fair, easier to understand, and to increase both compliance and revenue collection, the Fair Tax system is the best way to achieve that goal. Otherwise, in another five or ten years, we'll be right back where we are now.
Are we serious? You are the folks who will help decide that.