INCOME TAX REFORM

One integral part of our societal structure promotes waste, develops confusion and instills anger into almost every American. That part of our society is our income tax rules and regulations. No system on earth is more confusing, more biased in its structure or more nebulous in its environment. Our system costs billions to run (IRS, tax auditors, lawyers, accountants and “paper” dynasties). These billions are spent to collect or receive billions. Talking about it takes money to make money! Wouldn’t it be better to spend just millions to collect billions to support our American government and way of life?

There are people who immediately feel that our society would crumble due to the demise of the major governmental structure of the Internal Revenue Service. There are those who see economic trouble if lawyers and accountants become unemployed if they do not have tax work. Gosh, what would happen if we saved all the trees that are used to provide the mountains of paper involved in printing tax forms and related publications? That is really not seeing the forest from the trees!

The fact is our system is a spinning wheel. It goes round and round and spits out token dollars to run our government. If only our tax system would be more of an organized filter. A better system would provide a worthwhile outlet for every drop of funds placed into it. The greatest goal would be that every drop (dollar) would come out of the filter in an organized and purposeful manner. Two trillion dollars are derived from our income tax system every year. Americans, however, spend billions more to fulfill the entire tax process. Where do all these funds go? They went to the accountants, lawyers, printers and paper mill owners that clog the filter or are the stagnant spokes in the wheel that slows the tax cart. Wouldn’t it be great if these funds went to build more roads, provide more income for our social security senior class or into a workable and inclusive health care system that promotes a healthy lifestyle for all Americans?

In this better world the accountants and lawyers would work for the road builders and health care agencies. They won’t be working for the regressive tax system, but for progressive positive beneficial endeavors. Unemployment would not be a problem. Actually, with more disposable income, funds will be just redirected into more purchases of various goods which would result in jobs in these sectors.

Our current tax system is costly. We spend funds (over $200 billion) for compliance matters alone. These unneeded tasks are filling out tax returns, audit notices, liens, levies, seizures and over 30 million penalties assessed each year. The paper costs alone are staggering. Enforcement of the tax code obviously is also a huge burden on the system. The fact is the IRS is one of the largest employers in the U.S. Who pays these employees’ salaries? We do! Where does the money come from to pay these personnel costs? The income tax revenues!

There exist many costly errors in the system. The more rules and regulations, the greater the opportunity will be for differing opinions. Errors create jobs for the lawyers and accountants who back this insatiable stranglehold.

As I indicated, there are many interpretations of tax law because of the existence of the voluminous tax code. Critical decision making is fraught with problems. What can be judged wrong one minute, can be right the next and ultimately decided another way at the end. Is this the blind leading the blind? More words, more paper, more vague decisions, more errors and ultimately more waste in money and man hours to achieve this goal of tax collection.

Confusion has been rampant in the tax world. Even highly trained accountants, auditors and lawyers have vacillated on interpretations. No one person or entity can be accurate on all 60,000 pages of the tax code. One can only imagine the typical American with his or her limited knowledge of the rules as they face this annual burden. Is that interrogation or torture? Are we violating human rights here?

What can we do? The answer is simple as the tax goal. Tear up what is in place and start over! We need to start with a clean slate. The first task is to understand what our tax code is. We need to realize that it is an income tax, not a “maximize what’s deductible” game. Income must be the focus. All avenues of income must be accounted for. These are payroll, dividends, interest and capital gains. There would be no deductions from this calculation, except those that truly benefit our society, promote the betterment of our society, or assist and improve the welfare of all Americans.