Subject: How to Fix the Tax System
Comment: Taxes are seen as penalties, while the cost of government and the services
government provide are ignored.
There are many economic theories that point towards the "benefits" that are
gained by NOT taxing the creation of goods and services side of the
equation. If one has a choice between reinvesting and building a company
(and not be taxed in so doing), verses taking the money out and spending it,
the benefits of re-investing and building businesses, for the country, is a
growth of the economy.
Shifting the tax system to a "consumption" based system has its pros and
cons. Historically, this is almost impossible to track because cash
transactions can avoid being recorded. India is a country that has a
tremendous percentage of its transactions done outside of the tax system.
Today, we are quickly closing in on a paperless economy based on plastic
credit cards and electronic transfers. These can all be tracked. With this
change in our payment methods, so does the potential of successfully
instituting a Consumption based tax system.
I am in favor of a "flat" Consumption based tax system, including raw goods,
semi processed goods, and finished goods. This would include any goods being
purchased exterior to the US, which would have a uniform consumption tax
placed upon (payable by the purchaser whether prospective enduser or
reseller or manufacturer) them. This would end all "most favored nation" or
"regular" import duties. There could still be a restriction on the total
dollar amount brought in from "restricted or semi restricted" countries, so
that we are able to make our trade balance work. So, it would not eliminate
"quotas". There could still be a restriction on "all" goods coming in from
Non Profits (even 501c3) will not be exempt from ANY Consumption Tax. This
would also apply to the governments and might seem illogical for the federal
government to be paying taxes, but this would simplify the system to make
the Consumption Tax uniform for all private, corporate, trust accounts,
religious, non profits, governments, purchases.
Please notice that it applies to purchases by a US person, US Corporation,
US Trust, etc. It is not applicable for any purchase that is exported from
the US to a "non" US entity. It is applicable for a purchase by a US
person/corp/etc., that has it exported of the US.
The "flat" consumption based tax system would also include "housing" ... a
tax paid by the purchaser.
The "flat" consumption based tax system would also include ownership. So,
the transfer of ownership of Stock or ownership of a privately held
business, would all be subject to a "flat" tax by type.
Because the "Consumption Tax" never looks at "who" the consumer is, but only
the type of item purchased with a uniform flat tax for all similar items
(and not a scaled tax by dollar amount), then there is NO need for special
reports and extra books to be audited to handle difficult calculations based
on scales. There is only something that could be increasingly computerized
to "catch" money movement that was not taxed.
The ONLY tax police that are needed, would be those who go about spot
checking that the right tax was applied, so something is not fraudulantly
called "land" when it is a house, so something is not fraudulantly called
"clothing" when it is groceries.