This is the time of the year that anyone who is self-employed dreads – tax season. This is the time of year when I hole myself into my office and begin pouring over the mountains of receipts, records, and statements; all in an effort to minimize my family’s tax liability. It always puts me in a bad mood.
But, it’s absolutely necessary if my family is to survive economically. I have to find each and every possible deduction allowed to keep our heads above the waters before “the tax man cometh.” Did I save all my gas receipts? Do I have all the online records of charitable contributions? Did I forget anything in the check book ledger? Am I forgetting something that I could claim as a deduction or an expense? This is my life during this time of year.
I can’t imagine what small businesses go through during this time of year as well. For those individuals and companies who can’t afford to hire and/or employ full-time tax record keepers, it is literally a nightmare. The IRS tax code is thousands of pages long with hundreds of thousands of regulations, rules, and laws that we are all supposed to follow to comply with the government’s demands.
According to a recent Newsmax article, “Taxpayers spend 6.1 billion hours a year — at a cost of $234 billion in direct costs and lost productivity — to comply with the federal tax code, according to the president of the conservative National Taxpayers Union.”
This is sheer insanity! No wonder our economy has been stagnant for the last decade or so. But, it is all by design. The Washington politicians want the tax code as complicated as possible. There is one reason and one reason alone for this complexity – CONTROL! The federal government wants to control every aspect of every life and every business in America. Congress wants to decide who wins and who loses in the business world. They want to decide who gets which tax breaks to further enhance their re-election chances by this grand “vote-buying” scheme.
And, what has resulted? Washington is huge bloated bureaucracy that has managed to spend the nation into an unfathomable 20 trillion dollar debt! Wasn’t there some 1990s fitness guru who used to scream, “Stop the insanity!”?
Now, President Trump claims he wants to produce tax reform at the federal level. Hmm . . . let’s hope it goes better than his jaded attempt to fix healthcare!
So, what can and should be done to “free the slaves” from Washington’s iron grip on our economy and productivity? How can Americans who don’t have political connections ever hope to become prosperous again?
Actually, the solution is very simple; though nearly impossible to implement as long as Washington is in charge of the tax system. (And, as my accountant reminds me, though the IRS is repugnant in how they operate, they are only the tax collectors for Congress. It is Congress who has given us this tax behemoth.)
The answer to the problem is to remove control of taxes from the Washington bureaucrats, lawyers, and lobbyists and give it back to the American people. So, how do we do that? Quite simply. We scrap the current tax code with all of its loopholes, special deals, and commitment to paying people money who don’t work and replace it with a simple, one-rate national sales tax.
That’s right, start taxing consumption instead of production and assets. It would completely remove the politicians from control of the process. Yet, it would still provide adequate money to run the government. The American people would be directly in charge of funding the government with our spending. And get this, the better the economy becomes and the more money we have to spend, the more tax money will also become available for the government to spend.
It would make everyone responsible for the success of the government; not just the hard-working middle class. It wouldn’t punish achievement and wealth acquisition; the progressive nature of the tax code would be gone. And yet, the “rich” would still pay their fair share because everyone knows the rich buy more stuff than the poor.
Now, Washington will howl at this notion. They would no longer be able to manipulate the economy or pick winners and losers in business. No longer would they be able to reward their political friends and punish their political enemies. No longer could they send out their IRS attack dogs to harass anyone who dares criticize them.
In fact, gone would be the IRS – an obsolete relic of the past. With no plethora of special deductions and exemptions, they would no longer be needed. If every purchase in America, be it goods or services, resulted in a federal sales tax, sent in by merchants just like most of them do now for state-level sales taxes, the system would be pretty self-sufficient.
We wouldn’t need charitable deductions, mortgage deductions, educational deductions, personal exemptions, depreciation schedules, and a thousand other tricks of the trade now employed to control everyone.
Nope. People could make and spend as much money as they had ambition and skills to achieve. The money would continuously flow into the Treasury and the government would never claim it needed to shut down.
Now, don’t get me wrong. This kind of system would also remove much of the waste, fraud, and abuse of our current national budget. Politicians would no longer be free to spend as much as they want and then send the taxpayers the bill as they do now. No, instead they would actually have to use good judgment and prioritize their spending – covering the government essentials first and only
wasting allocating funds for less important items when and if money comes in for those things.
But, what about the extra cost to consumers? Won’t everything cost that much more if another tax is added to the price of the products and services? Surprisingly, no. If businesses are freed from the current huge government burdens of tax compliance and regulations that only a left-wing bureaucrat could love, they will be able to produce their products and provide their services to customers far more cheaply than they can now. Even with the added sales tax, the net result will be cheaper goods and services. Free market capitalism will see to that as further competition will drive prices down even more if government keeps its nose out of the process.
Am I advocating no government involvement? Of course not. The government still will be necessary to control fraud, safety issues, and quality assurance (especially when it comes to food and pharmaceuticals). But, if government is limited to providing a level playing field for all to have an opportunity to succeed instead of “fixing the game” to be assured their favorites win, then the power of the American entrepreneurial spirit and hard work ethic will take over and make things succeed.
Can this all work? Of course it can. It is economically and fiscally sound. Will America’s politicians have the will to implement it? Nope. They will only change from the current system if they are forced to do so by the American people who say, “Enough is enough!”
That means it’s up to us to “convince” all in Washington that this is what we want. As Ronald Reagan once said, “They may not see the light, but we can make them feel the heat!”
If President Trump is truly serious about tax reform; if he truly wants to “drain the swamp”; and if he wants to have a legacy as a great President, then he will endorse and push for this plan. He would have the full support of the vast majority of working Americans if this idea is presented honestly and simply to them.
But, if “tax reform” in Washington means only the reshuffling of the current tax code, nothing will change and America’s life’s blood will continue to drain away – replaced forever with red ink.