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Everyone fortunate enough to live in this country has a responsibility to help pay the bills. The federal income tax has become an incomprehensible system that is neither fair nor efficient and has become a vehicle for redistribution of wealth, class warfare and a way to reward special interests. Its' 20,000 plus pages of rules and regulations make it impossible to accurately compare the costs of government with the benefits received. A substantial part of the population are net tax receivers
and therefore have no incentive to control government spending. In addition, the IRS has been given nearly unlimited power to investigate peoples personal lives and finances, with unacceptable possibilities for abuse.
Therefore, I propose that Congress pass a law that will phase in a national sales tax and phase out all personal and business income taxes over a 3 year period (25% per year).
1.Details
A. The tax rate for the fiscal spending year will be determined by Oct 1 and will become effective
on that date. The tax rate shall be sufficient to cover all anticipated expenses and
is to include
a payment on the national debt. (see balanced budget page)
B. All goods and services except food, rents and exports will be subject to the sales tax one time
-Used goods would only be taxed on it's appreciated value
. - Financial investments will be subject to a 15% capital gains tax in lieu of a sales tax, except those
within a qualified IRA plan and subject to its' limitations.
C. An allowance will be made to pay the sales tax on certain capital items over an
extended period
of time. All taxes will be due and payable before resale of the items is
completed. These taxes
will be cumulative, such that taxes will be due at resale only on
the appreciated amount that has
not been taxed. The tax will be prorated in equal amounts
over the following time period.
1. Real Estate - 20 years
2. Automobiles - 5 years
3. Capital equipment - 10 years
D. All profits taken outside the U S by foreign entities shall be subject to the sales tax.
E. Exports will not be subject to the sales tax to make them competitive in the world marketplace.
However, Congress shall retain the right to
tax exports.
F. The sales tax will be phased in over 3 years to reduce the impact of the change.
persons income tax will be calculated as before and the amount due
will be reduced
by 25%. The second year the sales tax would be 8% and the income
taxes will be
reduced 50%. etc.
2.Constitutional amendment
A. The states will be asked to approve a constitutional
amendment instituting a national sales tax
and repealing the 16th amendment (allowing
income tax) and prohibiting government from levying
taxes on the income of U.S.
citizens and businesses. In addition, this amendment will prohibit
Congress from
imposing varying tax rates on different sectors and items. They shall only have the
option
of including or excluding these sectors or items from the sales tax.
3. Other taxes
A. All revenues generated by American companies from off shore manufacturing
operations shall
be taxed at 3%.
B. Maintain a 15% short term capital gains tax on gains realized on transactions made within a six
month period. This will not affect long term investing but will dampen speculation.
C. A death tax equal to the idividuals (age 50 or older) share of the national debt as determined by
Congress at the beginning of each year.This shall be a first lien on all assets including insurance.
1. Positive effects
A. It will introduce transparency into the cost of government and government
programs. Citizens
can make logical choices between representatives who will
increase their benefits and raise
their taxes and those who will reduce those
benefits and the associated taxes. It will not limit
the amount of money that
government can spend. Everyone will have a vested interest.
B. The two items which benefit all Americans, food and shelter, will be minimally
affected .
C. Everyone fortunate enough to live in this country should also assume the resonsibility to pay the bills
It will be a fair system in that those with more will pay more, those with less will pay less and those
who are subsisting on on food and rent will be temporarily exempt until their situation improves.
D. Reduces government intrusion in our lives. Since most states already have
a sales tax they could
assume responsibility for tax collections, making the system more efficient and less expensive.
The IRS would be reduced in size by 90% or more, a sizable cost
savings, and they would no longer
have access to our personal lives and finances.
E. People will have greater control over their earnings. They will no longer have taxes
withheld from
their paychecks. They can decide how much tax they pay by
adjusting their spending patterns .
F. Taxes will be collected on illicit activities such as drug sales, etc. since the profits
from these
operations are usually spent on legitimate items
G. Illegal residents will pay more of the costs associated with their living here.
H. Eliminate the cost of tax preparation for individuals
I. Improve our balance of trade as our exports would not be taxed. Our exports
will become
cheaper and our imports will become relatively more expensive.
Elimination of corporate
income tax and higher import costs will make it more
competitive to produce in the U S.
J. Will improve tax collections on "old wealth"
K. Government could choose to waive the tax for certain sectors to spur the
economy in times
of recession. i.e.. waive tax on purchase of business equipment for a
period of time
L. It will encourage saving and investing.
M. Taxes will be collected on borrowed money in advance of real earnings.
N. Citizens will no longer be required to subsidize charities they do not support or
approve of
as is the case with our current exemption status
2. Negative effects
A. The elderly on fixed incomes will have to pay sales tax. However, those on the low
end will
pay very little since food will be exempt and there should be little, or no
increase in rent,
which are their primary expenses. However, the elderly are the group
most responsible for
the financial mess we are in by allowing the fiscal irresponsibility of
the last 60 years and
therefore, should share the sacrifice required to remedy the
problem.
B. Tax preparation businesses will suffer, although their services will still be required by
government, business and estate planning.
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