Okay, we need to have (pa-tooey) Income Tax and a smart politician once said taxes should hurt (that way they should be harder to increase). But that politician never met the current Congress or Presidential Administration or he would know these people don't care if it hurts us especially since Government workers owe about $1,000,000,000 (that's a Billion dollars folks) and the IRS doesn't seem inclined to "...relentlessly pursue" these deadbeats as the TV ad claims. Hello...Since the Secretary of the Treasury (boss of the IRS Tim Geithner), doesn't pay taxes why should they make any of his Cohorts in Crime...er...Congressional Friends pay taxes? But I digress into a morality discussion. None of these problems would exist if we would just employ my old (ask anybody who worked with me in the 1960's), espoused Flat Tax system. Back then, I proposed a 10% income tax rate for everyone, but now I would have to say about 18%. Before all you people that believe we should tax the rich more and that the current, progressive tax system is what you want, just remember this; No tax system will support the unsustainable debt (only after passing Obamacare you heard this from Paul Vokel, Ben Bernanke and The CBO to name a few) caused by our current expenditures without raising taxes on everyone and almost everything. Haven't these clowns been watching Glenn Beck? I know they do so they can't claim that they never heard of reducing expenditures (Spending). When you try to comprehend the current debt (which only increases when you employ a philosophy of "Deficit Spending") it becomes so mind-boggling it seems to numb the senses.
I believe that only two Income Tax Strategies are fair. One is a tax on Consumption (or National Sales Tax, NOT the VAT) and the other is a flat rate tax for everyone. The National Sales tax only taxes people that have and spend the money on goods and services. I prefer the flat rate income tax because that way everyone pays their "Fair" share. For the rich it is more dollars and for the poor it is less dollars but everyone pays the same percentage, EVERYONE. My taxation system would contain no credits, no exemptions, no non-taxable income and therefore no tax filings or refunds. I would tax everyone including the poor, the people receiving Welfare and even church personnel (like Priests or Nuns) that currently work for non-taxable income (which as I said does not exist in my system). Even I would have to pay 18% tax on my SSD income, as everyone else receiving Social Security would have to pay. If I need assistance after the tax, then the government should provide it, at which point I would pay 18% of that too. That way, the only tax cheats would be those not reporting income and IRS resources could be better allocated to discover those people.
Think of the money the IRS could save. No Tax Publication costs, or having to hire programmers to design screens or other costs associated with providing and processing returns. This also facilitates a balanced budget by knowing that all tax revenues received are actual, spendable income for the Government. I know there are downsides associated with this system. One is that Tax agencies (like H&R Block), Tax Attorneys, Paper and Ink producers and Publication Printers and Deliverers that will either have their businesses slashed or put out of business altogether, but this is a small percentage of the American people compared to those that it will help. Also, these jobs, with the exception of the Tax Specialty Attorneys, are seasonal, like department store Santa Clauses and Easter Receipts.
Think of the savings for the IRS in auditing individuals and companies. Right now, reporting agencies who have to notify everyone with tax forms that require explanations and need to have programs that calculate interest, for example on savings, or any instrument (and the infamous 1099-INT statements which would now only go to the Government). Therefore, only the reporting agency needs to notify the IRS about interest and only they need to be audited. Since everyone pays the same rate, the banks can pay out the interest but only pay out the interest to the individuals after 18% is deducted and reported to the IRS. When companies pay employees, they do the same. When they deduct the 18% Income tax they send it to the Government and their Taxation on payroll is completed for that period. No W2's or 1099's required (which always have printing and form changes required) since the money sent was all reported and taxes paid at the same rate already. The main IRS job would now be to both protect consumers (making sure their taxes are dutifully processed) and audit the reporting agencies/companies to discourage tax cheating by under or non reporting income. Makes tax cheating a lot harder on Interest doesn't it?
Racing tracks currently pays out winners by adding total wagers per race; deducting the track's cut (whatever that is) from the total and then allocating winnings. When Individuals cash those tickets they only have to report winnings over $600 on a $2 or $3 bet (used to be those limits). Since people know this, there are individuals who are low-income hanging around tracks to cash winning tickets for a price, which is usually less than the tax. Also, the winnings would not have to be added to the real winner's total income at tax time, which could possibly raise their progressive taxing rate. Now the race track can add up entire wages bet on a race; calculate the 18% interest and then report and send it to the IRS (the Individuals & Corporate tax rate are both 18%). Take the remainder and allocate it, after taking their cut, then allocate the winnings. Neither the Track nor the individual winner is not taxed on this income because it is already taxed and reported.
There are more benefits and downsides to my plan but I feel that to make the Tax fair and to also help balance the budget, we need a Flat Tax rate for Income tax.