Subject: Repeal of Income Tax Comment: I prepared my first income tax return in 1952. Currently my firm prepares about 2,000 tax returns per year of which I personally prepare about 600. In 1992 I studied all of the proposals and determined that the only tax that was fair and made economic sense was a sales tax at retail. This tax should replace all of the current hodge podge of taxes, including the social security tax. There are three things that must be done if the sales tax at retail is adopted: The 16th Amendment must be repealed. The Constitution must be amended to set a maximum sales tax rate and allow no other types of taxes. Food, Clothing, rents up to $1,000/month and residential utilities (including telephone) would be exempt from taxation. The rebating of sales taxes to every family up to the poverty level increases the probability of fraud and also increases the administrative expense. Exempting the above items will cover the majority of the expenses of low income individuals. The income tax must be abolished. It is a detriment to economic expansion. I routinely hear the following from taxpayers as I prepare their income tax returns, "I turned down overtime because I would pay too much tax." or "How much must I earn so I do not lose my (Earned income Credit, Social Security, Food Stamps, Medicaid, etc.)" or "Why should I work so hard, they will only take it in taxes." or "How much must I earn so that I do not go into a higher tax bracket." I am the treasurer of the NAEA (National Association of Enrolled Agents) Large Tax Practice Retreat, as well as a member of several other preparer organizations. Every taxpreparer has heard the same statements, year after year after year. A system that rewards inefficiency (losses and lower income) with reduced taxes or benefit increases (handouts) while penalizing efficient individuals with higher taxes will result in the collapse of the economic system. The collapse is already underway - it is called CASH UNDER THE TABLE. I estimate that in Susquehanna County, PA, Cash under the table represents about 40% of all transactions. The introduction of increased penalties has not stemmed the trend, but has accelerated it. In the late 50's and early 60's, compliance was estimated by the IRS to have been 97%. Recently the IRS has estimated the compliance percentage at 84% or less. My personal experience as a tax preparer thru the decades confirms that the IRS estimates are correct for 50 years ago as well as today. Penalties do not increase compliance - fairness and a reasonable tax coupled with fiscal restraint by government are the only things that improve compliance. Bear in mind that 50 years ago we had 97% compliance and there was no 1099 reporting or any kind. Today we have massive 1099 reporting (which is enforced slave labor on the businesses that must do the reporting) and the compliance rate is 84%. Time to begin reviewing what is wrong - including a spend thrift Congress that ignores the Constitution. My firm, Angelo Ventresca Associates, employs four full-time people in addition to myself and my partner. We also employ 4 part-time people at various times of the year. Our entire business revolves around income and payroll taxes. If you would adopt what I propose, we would have to find new, productive areas for our income source. Yet, I am still in favor of the complete repeal of the income, SS, gift and Estate taxes, since I know that it is in the best interest of my children and grandchildren. As a side benefit, the repeal of the income taxes would make the USA the best place to establish an International company. We have a well educated and productive workforce - it is only our massive taxation policy that drives business abroad. I understand that politically our elected representatives do not wish to give up their ability to take money from a producer and hand it to a non-producer. This, after all, guarantees the representative re-election. Have the courage to dismantle this unproductive, unfair and massive taxation system so that we can unleash an economic boom that will last 50 years or more. Sincerely, Angelo Ventresca, Jr., MS EA Senior Partner Angelo Ventresca Associates RR 5 Box 54 Montrose PA 18801-9318 Phone: 570-278-2721 Fax: 570-278-4413 Web Site: www.angelov.com |