Journal Penguinshit's Journal: Abolish the IRS (and replace it with something better) 7
How about abolishing the IRS?
Imagine the impact that campaign platform would have on the American populace. Imagine the mortal blow that would cause to the Republican agenda.
The IRS was a controversial institution from the beginning. It is now widely regarded as the financial gestapo of the Federal government. Not a single citizen looks forward to April 15. The Republican Party has long derided Democrats as "Tax-N-Spend" politicians. The single strong platform of the current Bush campaign is the misinformation that John Kerry will "raise taxes".
Let's do away with the IRS altogether. In its place, institute a Federal Sales Tax of 2% on all taxable goods. Adding a Federal Sales Tax of 2% would be a negligible increase to State and/or County taxes (that exist) on all but the most expensive goods (and those would be goods that are not purchased often, on a repeat basis). However, based on the large volume of commerce that occurs in the US on a daily basis, imagine the income for the Federal Government...
Abolishing personal income tax is a tax cut across the board. The rich, by virtue of more spending on higher priced items, would be taxed their fair share. The poor, by virtue of spending on lower priced items, would retain more of their earnings to pay for their items (making tight budgets easier to manage for working families). The class divide between those with enough money to hide their assets in tax shelters and those without the disposable income to take advantage of these same shelters would disappear overnight.
This, in my opinion, is the best way possible to effect a "flat tax". More money would remain in the pockets of American citizens. The citizens could be rightfully expected to exercise their newfound windfall by purchasing goods they otherwise would not or could not purchase according to their needs, the economy would explode with the surge in consumer spending and confidence, and the Federal government would realize a huge untapped revenue source that would not be felt so acutely and painfully by the American populace (by spreading the taxation out over hundreds, thousands, or even millions of separate small transactions).
I am not an accountant, and lack the exposure to the necessary information to do a proper study on this proposal. But a basic thumbnail sketch of this over the course of a week (largely based on introspective observation of my own spending habits) lends some weight to my intuitive feeling that this could be a win-win situation.
I invite your comments regarding this proposal. Of course, I would beg that you keep the comments to the point of "IRS vs. Sales Tax" such that we all attempt to keep the lid on the fractious political flame-war that threatens to engulf all such discussions.
Thank you.
Rich people don't buy more stuff... (Score:2)
Re:Rich people don't buy more stuff... (Score:2)
Good thought. Investment, though, is a good thing (perhaps someone with more money to invest would invest in my start-up...). And the poor and middle classes already pay a disproportionate share of the tax due to shelters that are really only available to the wealthy.
However, because of the nature of the US "throwaway society", people tend to purchase small and medium items (and repurchase these same items) on a constant basis. Poorer people, in my experience, without the money to constantly re-aquire
RealEstate, Gains,Retail, Wholesale and middlemen (Score:2)
RealEstate, Gains, Retail, Wholesale and middlem (Score:2)
Anyway, So would you advocate taxing exchanges in Real Estate? Owning property is one of the best ways of creating wealth, especially for people just starting out. So if you tax it then it might inhibit poor and middle class getting into more stable finances. But if you don't tax it then the rich class who probably own quite a bit more pr
Re:RealEstate, Gains, Retail, Wholesale and middle (Score:2)
Ownership of land (and buildings, etc.) are already a prime example of investment. I forget the term, but avoiding income tax by re-investing sales of land into more (or bigger or better or..) land/property is, as you say, a primary vehicle of gaining wealth. I don't think changing that area is worthwhile.
As for dividends, I would seriously consider that. Tax-free investment would be a primary loophole for the wealthy to shelter their money. Investment is good, but tax-free income from that investme
Re:Same comment as loucura... (Score:2)
Understood. See my response to Loucura, though.
A wealthy person may not purchase 100 Dell computers, but they are much more likely to replace that single computer in a much shorter span than would a less-wealthy person. And a wealthy person would more likely purchase the $1800 system whereas the less-wealthy would be more likely to purchase the $650 Dimension Celeron deal on the front page of the website (or catalog, or what have you).
And let's face it, with the tax shelters available to the wealthy u