Subject: Tax Reform Comment: Dear Tax Reform Panel, I am an income tax preparer in the state of California, and have been working in this profession for almost 30 years. Consequently, I am experienced with the workings of the U.S. tax code and the forms and procedures of U.S. tax system. I have also been the treasurer of two condominium complexes and am quite experienced in how the management and financial matters of condominiums work. In terms of correcting the U.S. tax system, I see a connection between the way a condominium raises the money from its owners to pay for the common obligations of the building (including the reserve fund for any contingency expenses) and the way that the U.S. tax system raises money from its citizens to pay for the total obligations of this country. Basically, the managers of the condominium complex determine the total amount needed to operate the complex and then divide this amount by the number of condominium units in the complex. It doesn't matter how large the units are or how many bedrooms they each have. Each separate unit pays an equal amount because they are equal owners of the entire building. Hypothetically, if the building needs to raise $100,000 and there are 25 units in the building, then each unit owner pays $4,000 per year to cover the cost of the operation of the building. The unit owners have the choice of paying this amount annually, monthly, etc. In my opinion, it should be the same for operating the financial burdens of this country. The general accounting office (GAO) should determine the entire budget needed per year to pay for everything necessary to run this country....this includes the military, Social Security benefits, Medicare, welfare, potential national healthcare, and etc. Then, my suggestion is that the administrators of the tax system should subtract from this total all estimated revenue raised from businesses and corporations according to the present system of taxing these entities. In other words, nothing changes as to the system of taxing businesses and organizations or entities, that are necessary to allow for limited liability. The net difference or balance should then be raised from the individual taxpayers. My suggestion is that this net amount is divided among all the citizens and residents of the U.S.,with a valid identification number, between a certain age, (i.e., between ages 18 and 65). In other words, it is my opinion that if we are all citizens or residents of this country, we should each be equally responsible for paying the taxes necessary to operate this country. Hypothetically, if the net difference comes out to about $5,000 per U.S. citizen or resident, then each person should be responsible to pay this amount per year. Obviously, any person who is "rich" would pay their $5,000 per year quite happily and without regret by sending in their money after receiving their annual bill from the I.R.S. This payment can be paid in a lump sum, semi-annually, quarterly or, for employees, withheld from their paychecks through the present payroll system. The problem is that "poor" people would not be able to pay their share. My suggestion as a way to resolve this is to determine the definition of what it means to be "rich" or "poor". Poor people should be able to file a form with the I.R.S. to show that they are either exempt from taxes entirely or partially based on some formula for exemption or waiver. The I.R.S. will administer this exemption system and will allow for administrative procedures and appeals. Rich people should have to make up the difference that is not met by the middle class and the poor by being taxed a surcharge or addition to the base amount, based on a formula which allows for a progressive tax system and includes deductions for home mortgages, charitable contributions, medical expenses and etc. Once again, the formula for determining who is rich, middle-class or poor is calculated by the U.S. taxing authorities. In summary, all U.S. citizens and residents, whether married or single, will be required to pay some base amount of taxes each year, individuals, after being billed by the treasury service which determines this base amount. Poor people (including spouses who do not generate income) can file an exemption for all or part of this base amount. The middle-class will pretty much pay the base amount. Rich people will be required to pay the base amount plus a surtax which is calculated to make up the difference. The entire budget of the U.S. will be collected each year by the taxing authority. Also, each year, the GAO will determine the new budget and either increase the base amount and the surtax to the rich or will provide a refund to taxpayers if they have collected too much in a prior year. Certainly, this system will include (like a condominium) the collection of additional taxes to cover a reserve fund or a contingency fund, if needed. The benefits of my suggested tax system are: 1) It simplifies the present system, especially for individuals, in that it eliminates the cost factor of collecting and auditing taxes by the I.R.S.; 2) It does not change the present tax system for businesses and organizations, so that tax professionals, like myself, continue to work in this sector; 3) It benefits the poor taxpayers by alleviating or waiving their tax obligations; and 4) It benefits the middle class and the rich by simplifying the individual tax system because each year they will receive a bill and then simply pay the bill according to the choice of method of payment. This is similar to receiving a bill for property taxes and just sending in the payment. Thank you for your consideration. Steven Weinraub |