By Gary P Jackson
The need for tax reform is nothing new. In fact, it’s been a hot topic for years. The immorality of the income tax, combined with rampant corruption, makes the case for ending this confiscatory method of taxation incredibly strong. Add in the recent revelations of the IRS targeting those who disagree with the Obama regime, among other things, and the case for reform has never been stronger!
I’ve had what I feel is a simple, workable plan, that has been rolling around in my head for a little over a year. Thing is, every time I think about sitting down, and putting the words in print, something else pops up that I think needs talking about more. Maybe, in the long run, that’s a good thing, as now, more than any time in history, the American people are ready for a serious change. Had I written this a year ago, no one would have paid attention!
In order to make the case for change, we need to look a bit at where we are at. We need to talk about why what we have doesn’t work, and what to do next.
There are several plans already out there, a few of them have a lot of support. I’ll look at those too, and explain why they don’t make a lot of sense. Then, of course, I’ll lay out my ideas, and why I think they will work the best.
This is not a short piece of writting, so take time to read it, even re-read it, before passing judgment. One of the reasons I spend so much time talking about some of the other plans out there, is simply to make sure readers understand why they are not the answer. [even if you feel my plan isn’t either] .
Why we need a change:
It’s easy enough to say that an income tax is immoral, and just walk away, but that doesn’t tell the whole story.
The federal government doesn’t just use the lengthy and complicated tax code to raise the money needed to fund government. Indeed, the government uses the tax code as a way to bring about social engineering. Our tax code rewards behavior politicians deem “good” and punishes what politicians deem “bad.”
Of course what politicians reward isn’t usually a good thing, nor is what they punish always bad. Most often the government encourages programs that are not only injurious to society, they also waste our money.
For example, look no further than the tax benefits [and massive tax payer funded subsidies] failed ideas like ethanol and other so-called “green” programs get.
Ethanol, as a mass consumer product, is junk. Ethanol destroys fuel systems of the vehicles using it. [and God forbid you put it in an older car or motorcycle] It’s driven up the cost of all foods we eat, especially beef and poultry. That’s what happens when you try to use food and turn it into fuel, as we are doing with corn. It costs a lot more to feed livestock now, thanks to the ethanol program.
The net pollution, the reason this crap was created in the first place, actually increases. Pollution sees a net increase, not only due to the process used to create ethanol, but by the fact the stuff is so corrosive [and collects water] that it cannot be sent through the normal pipeline systems. Instead you have to truck ethanol where ever it needs to go.
And since ethanol actually has less energy per unit, you consume more of it per mile than regular unleaded gasoline. Yes, I know IndyCar and NASCAR run an ethanol blend, and while that’s a lengthy conversation in itself, it should be noted that while the power per unit is low, the net octane rating in ethanol is actually higher. This is a great thing in a high horsepower, high compression engine, especially since fuel mileage, miles per gallon, really, really doesn’t matter! Racing engines make up for the fact this junk fuel has less energy per unit, by simply increasing the number of units! You just burn more fuel to do the same work.
You look at a new “flex fuel” vehicle on your dealership’s show room floor, and you’ll notice, that on the federally mandated window sticker, there are not one, but two different sets of fuel mileage figures quoted. One for regular gasoline, and a lower one, for the ethanol blend.
Ethanol may be less expensive than regular gasoline, but only because of massive subsidies and tax breaks, Factor in the deficiency in actual power, and more fuel consumed, and no one saves anything. Ethanol is a disaster.
BUT, your state and federal governments not only directly subsidize this massive failure, they use the tax codes to encourage even more failure!
The same goes for other “green” programs. Politicians and their cronies have found the way to dupe the public, AND reward their friends. There are dozens of so-called “green” companies that have been given not only massive tax credits, but actual tax payer dollars, only to take the money, then file for bankruptcy. As it happens the principles of these “green” companies all happen to be campaign donors of our current president. People, including politicians, should be in prison, but instead, more of this madness is planned.
All of this is possible because of politicians. Our current tax code is incredibly complicated, and allows for all kinds of treachery and gaming by politicians.
Taxes are always used as a political football. Political parties use it to demonize the American people, and each other. Liberals especially love to use taxes as a way to carry out their never ending class warfare nonsense. But politicians in both parties are able to use taxes as a major political strategy. Meanwhile, the American people, THEIR EMPLOYERS, get screwed.
A tax code needs to be simple, and tamper-proof. By that, I mean it needs to be pretty much set in stone. It needs to written in a way that it treats every single tax payer exactly the same. No exemptions, no exclusions, and no rewards. It shouldn’t matter if you are the President’s best friend, or worst enemy, your tax situation should be the same. No amount of politicking should be able to change things.
A tax code needs to be written in such a way that it can’t be abused, because there is nothing that CAN be abused. The IRS couldn’t target groups, because there would be nothing they could target them for, or with.
Nearly 50% of all Americans pay no taxes.
There have been all kinds of suggestions on how to fix this problem, and make no mistake about it, this is a problem. Half the country has no skin in the game. If you are not invested in something, emotionally and financially, you aren’t generally engaged. You realy don’t care what happens, because it doesn’t seem to effect you! And as long as it doesn’t effect you, you’ll either stay disengaged, or just vote for whoever gives you the most “goodies” using other people’s money.
I could go on and on about the self-perpetuating liberal welfare state, but if you are reading this, you probably already understand the “plantation” this has created, and the millions of men, women, and children who have been enslaved by Big Government and our current tax code.
A successful tax code will have absolutely everyone, including the 10s of millions of illegal aliens here, paying taxes. Of course, a successful tax code will never be punitive, nor will it harm the poorest among us. In fact, a successful tax code should also stimulate the economy to a point that we have fewer poor, and fewer dependent on help from anyone.
A word about corporate taxes
The United States now has the largest corporate income taxes of any civilized nation on the planet. This, in itself has caused businesses to move elsewhere. It’s also caused businesses to look at ways to move money off-shore. In fact, one of the big debates at the recent G-8 Summit was the United States looking for help from other nations going after what it considers tax evaders, people parking money overseas. Good luck with that!
This is such a problem, with hundreds of billions of dollars overseas, that many have suggested waving taxes and penalties, a sort of limited amnesty, just to re-repatriate those American dollars! There has to be a better way.
For all intents and purposes corporations don’t really pay taxes anyway. Now I’m not talking just about “friends of Obama” like Bank of America, General Electric or Warren Buffett, who have famously weaseled out of paying taxes, I’m talking about stand-up, all-American, legit companies. These companies, as well as those “friends of Obama,” [who might pay taxes] simply pass a significant amount of the cost of their corporate taxes along to the consumer.
Many have suggested simply getting rid of the corporate tax, and reforming the current income tax code. That would help, but there is a better way yet.
The Government has forgotten that it’s YOUR money not theirs!
Of course, politicians have also forgotten that they work for YOU, not the other way around! When you look at most politicians and start talking about “Of the People, By the People, and FOR the People” it’s all they can do to stop themselves from laughing right in your face! Is it any wonder they think your money is theirs?
The current income tax code has led to a mentality, especially among liberals, that ALL of the money belongs to the government, and if you’re lucky, they let you keep a small portion of it! In fact, at President Obama’s 2012 Convention, the DNC went a little further, and suggest that WE actually belong to the government! That government is the ONLY thing WE all belong to! I think I get [sorta] what was trying to be said, but no matter how inarticulate it was said, Americans didn’t much care for it.
Someone who works for a living earns that money. It’s theirs! A successful tax code won’t care how much someone earns, won’t punish someone for earning more than someone else. A successful tax code will NOT tax income at all.
Also, a successful tax code will not care about marital status, how many children one has, or any thing else. It’s not the government’s business.
Death and Taxes
Two words: “Estate Tax.”
From the IRS’ own website: [emphasis mine]
The Estate Tax is a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interests in at the date of death (Refer to Form 706 (PDF)). The fair market value of these items is used, not necessarily what you paid for them or what their values were when you acquired them. The total of all of these items is your “Gross Estate.” The includible property may consist of cash and securities, real estate, insurance, trusts, annuities, business interests and other assets.
Once you have accounted for the Gross Estate, certain deductions (and in special circumstances, reductions to value) are allowed in arriving at your “Taxable Estate.” These deductions may include mortgages and other debts, estate administration expenses, property that passes to surviving spouses and qualified charities. The value of some operating business interests or farms may be reduced for estates that qualify.
After the net amount is computed, the value of lifetime taxable gifts (beginning with gifts made in 1977) is added to this number and the tax is computed. The tax is then reduced by the available unified credit.
Most relatively simple estates (cash, publicly traded securities, small amounts of other easily valued assets, and no special deductions or elections, or jointly held property) do not require the filing of an estate tax return. A filing is required for estates with combined gross assets and prior taxable gifts exceeding $1,500,000 in 2004 – 2005; $2,000,000 in 2006 – 2008; $3,500,000 for decedents dying in 2009; and $5,000,000 or more for decedent’s dying in 2010 and 2011 (note: there are special rules for decedents dying in 2010); $5,120,000 in 2012 and $5,250,000 in 2013.
You can use two more words here, as well: “Gift Tax”
Never mind that taxes have already been paid on this money. If you die, and have a fair amount of money and property, your heirs will pay through the nose! This tax has hurt a lot families, especially farm families, who have lots of land, but little cash. Many family farms, family homes, and other real properties have been sold, simply to pay government it’s due. Besides double taxation, it’s immoral. It’s really un-American.
A successful tax code will never destroy families, or their legacies.
Two of the world’s Top 20 Economies have no income tax!
How can a large government exist without an income tax? Turns out, a responsible one can exist quite well! Depending on who’s doing the ranking, Texas [if it was a country] is somewhere between the 10th and 14th largest economy in the world. Texas is also the number 2 economy within the United States, passing up New York in 2011. Texas’ GDP in 2011 was $1.207 Trillion, roughly the same as Russia’s [$1.231 Trillion] and larger than the GDPs of South Korea, India, or The Netherlands.
Not only does Texas’ economy, and her people, thrive without an income tax, our Constitution prohibits it. The last democrat to hold the Governor’s office was Ann Richards. Richards and her crew were pushing hard to create an income tax. This went over so well that Richards lost her office to George W Bush, and Texans haven’t elected a democrat to statewide office in two decades!
There’s a reason why people and businesses are moving to Texas at an incredible rate, and it isn’t just the blisteringly hot summer weather and beautiful scenery!
Florida, which has a GDP of roughly $750 Billion, is also in the Top 20 economies worldwide, and has no income tax.
You’re NOT going to “abolish” the IRS!
The most popular chant today is: “Abolish the IRS!” It sounds really nice, but it ain’t going to happen. I think all but the most extreme realize that governments need funding, and that taxes must be collected. The IRS is corrupt from it’s tip to it’s tail. In it’s current form it can, and often IS a weapon used against the American people, and I am not just talking about Obama’s using the IRS to target Conservative groups either. The government has used the IRS for decades to target certain people and groups.
Looking at some of the folks who have been brought before Congress to testify, I think we can all agree a whole bunch of people need to got to jail, and a significant number should consider themselves seriously lucky if they JUST get fired! Yes the IRS can be pared down, reducing the number of employees by at least half, if not two-thirds. In fact, it needs a serious housecleaning with every single employee looked at and re-evaluated.
That said, the idea of just killing the IRS is silly. While it sounds right, no matter what we choose as a way to generate revenue for government services and general upkeep, SOMEONE is going to have to collect that revenue! The signs are already there and the stationary is already printed up. Change the employees, every single one if needed, but the agency is what it is.
A successful tax code would eliminate most, if not all of the situations that an IRS employee, politician, or president could exploit for their own purposes.
The “new and improved” IRS couldn’t target individuals or groups, because it would have nothing to target them with, no reason to even be dealing with any individual or group. You wouldn’t have to beg the government for tax exemptions because everyone would be paying the new tax! There would be no exemptions! The tax wouldn’t be on the income a group would generate.
Let’s look at some of the ideas already on the table.
They range from bad, to worse, to so ridiculous you wonder if the authors were high when dreaming them up! One is such a ridiculous Big Government clusterfark, it’s hard to believe it’s the most popular alternative out there!
To understand what WILL work, you have to understand what won’t, and why.
This sounds nice, simple, and sweet. In fact, if you don’t mind keeping Big Government and corrupt politicians in power, it ain’t bad!
No seriously, the idea isn’t all that bad. Under a flat tax, the rate would be considerably lower, but there would be few, if any deductions. If it worked as advertised, you could literally file your yearly tax return on a post card size piece of paper, and move on.
Frankly, at one time I thought this was ideal. Everyone would pay the same. You’d exempt the first say, $20,000 earned income from taxation, as not to harm the poorest among us, and/or make up for all of the deductions you no longer get, and pay taxes on the rest.
For example, if you made $30,000 a year, you’d deduct the $20,000 and then pay tax on $10,000. This of course, would always have to be adjusted for inflation. Not horrible, but not the answer.
An income tax is an income tax. If you have this kind of tax code, you’ll ALWAYS have politicians using it as a way to demonize the “other side” and you’ll always have groups seeking tax exempt status, and of course, being susceptible to targeting by corrupt, and frankly evil, politicians.
An income tax simply allows for too many situations that can be corrupted. We must get away from taxing income altogether. We must have a tax code that once created, can’t be easily “adjusted.”
Value Added Tax
I don’t think too many people took Mitch “Truce” Daniels seriously when he proposed this nonsense, but the [former] liberal Indiana Governor thought implementing a European Socialist style Value Added Tax [VAT] was the hot ticket a few years back. It’s probably why his much touted [by the GOP Establishment] presidential run never took off!
A VAT is kind of a stealth tax. Simply put, you tax products during ever step of the manufacturing process as “value” is added. The way it works, if a manufacturer of say, an automobile, has to purchase parts from outside suppliers to complete the build, and most of the parts used to build an automobile come from outside vendors these days, the manufacturer pays taxes on these items when they purchase them. The consumer has no idea what that tax is, as it’s built in to the cost of the item. It can add 25-30% cost to the item, depend on the country, and of course, the item. A big deal on high end consumer products.
In the United Kingdom, the VAT is 20%, with “reduced rates” for certain goods. On their website, the UK version is explained by telling consumers that:
When someone charges you VAT they multiply their selling price by the VAT rate to calculate the amount of VAT to charge.
They then add this to the selling price to give you the price you actually pay – this is called the ‘gross’ price.
In the UK, and other countries assessing the VAT, this is IN ADDITION to an income tax [between 20 and 45% based on income, in the UK] and other taxes, such as property taxes, health care taxes, etc., etc, etc…
It would seem the Brits need the Tea Party even more than we do!
Much like the Brits, “Truce” Daniels proposed the VAT, IN ADDITION to our already confiscatory income tax.
Did I mention that Daniels was in charge of the Office of Budget Management under President George W Bush? Now you understand why Bush’s fiscal policies were such a disaster, with government growing leaps and bounds! Of course, they all still look like amateurs compared to Obama and the democrats, but still.
NOTE: Between the time I first started composing this article [two weeks ago] and a couple of days ago, the fact that ObamaCare is such a disaster, and many won’t sign up no matter what, the notion that a VAT is the only answer to raise enough money to fill the void, is being tossed around by pundits.
As bad of an idea as the VAT is, it’s not the worse idea being tossed out there, which leads us to ….
The “Fair Tax,” something so completely ridiculous only a Big Government Liberal could love it!
I’m going to get hate mail. I Don’t care. I’ve argued at length with people that think this is the best thing since sliced bread. They are actually worse, sometimes, than your average liberal. No matter the common sense argument against this nonsense, they’ll spend a crazy amount of time telling you why it don’t matter.
The “Fair Tax” is a consumption tax, a sales tax. Now the idea of a sales tax is right. That IS the only way to fund government. It is the fairest way. to fund government. It would grow the economy, and stop massive corruption in government. A sales tax is what will work, just not THIS sales tax!
The so-called “Fair Tax” doesn’t eliminate a single problem we have now, when it comes to corruption, political grandstanding, or even tax payer equality!
Out of all of the ideas out there, sadly, this thing seems to have gained the most steam. It has some “big name” backers. [If you consider a corrupt, liberal tax and spend former Arkansas Governor turned talker and a third tier radio talker “big names“] In fact, those that think this insane mess is the answer, are almost evangelical about it. I think it was the outright lie that it would “fire” the IRS that has been turning so many on.
There is also a massive PR machine pushing this thing.
In a few rather short paragraphs I hope to put this nonsensical plan out to pasture forever.
BTW, the fact that Big Government liberals like Mike Huckabee love this mess didn’t turn me off to the idea, but knowing they are for it certainly didn’t help the situation!
A little reality check:
With apologies to Jimmy McMillan
The “Fair Tax” is too damned high!
The talk among fair taxers is a rate of somewhere around 25-27 percent on everything, and I DO mean EVERYTHING! From food, to automobiles, to real estate, the tax is all the same. They claim an “effective tax rate” of anywhere between 0 and 20% depending on the idiotic “pre-bate” each tax payer would receive. [much, MUCH more on this lunacy in a minute] Oh, and their Twitter account actually gives examples of taxpayers getting so much “pre-bate” that their tax rate is in the negative, meaning they get more from government than they pay in! Exactly what we have right now!
If you follow them on Twitter, whoever actually does the tweeting, puts out a dizzying number of tweets with all kinds of alleged facts and figures based on family size, and other kinds of nonsense. This damned thing is every bit as complicated as the income tax we have now! Again, more on this in a minute.
Here’s the problem, all but a five states, Alaska, Delaware, Montana, New Hampshire, and Oregon already have a retail sales tax. Of course, except for Alaska, which only has sales taxes and/or property taxes in individual municipalities, but no statewide sales taxes, or income tax, all of these states above have both state income taxes, and often taxes on accommodations and local sales taxes.
For the rest of the nation, the retail state and city sales taxes combined can run from around 6% to 10%. In Texas we pay 8.75%. Worst case scenario, under the “Fair Tax” one would be paying as much as 37% at the cash register for most items, including automobiles, over and above the retail price of the item!
It’s simply too high.
The “Pre-bate,” quite possibly the stupidest idea anyone ever came up with, for numerous reasons!
Rube Goldberg was a 20th Century artist, engineer, inventor, and “exotic thinker.” Goldberg gained considerable fame with cartoons, and actual working inventions, that used incredibly complicated mechanisms to perform the simplest of tasks. In fact, the simpler the task, the more complicated the machine Goldberg could invent to do the job! A fascinating man.
Rube Goldberg would absolutely, positively fall in love with the “Fair Tax” and this insane notion of a “pre-bate!” That’s how insanely complicated this thing is!
In case you haven’t guessed, THE ONE THING that made me realize the fair taxers were not serious, was this pre-bate. So much so that my usually salty language only gets saltier when talking about the entire plan. Stupid is far too kind of a word for this deal!
Here’s their plan. You’ll pay through the nose at the cash register, but hey, don’t worry, Big Government will send you a “pre-bate” check ever month! As I noted above, this pre-bate, much as with the current tax code will mean different tax payers will pay different “effective” rates based on this ridiculous pre-bate. In other words, based on the size of your “family unit” you’ll get a set amount of money each month from the government, supposedly to offset the taxes on necessities, like food.
Again, if you care to peruse their official Twitter feed, you’ll see a dizzying number of “examples” of pre-bate amounts, such as this one:
Of course that’s a ridiculous example, but were talking about a ridiculous idea, so…
Here’s how they describe the pre-bate:
How nice of them to “ensure” you can consume “tax free at or above the poverty level!”
You’re not here so you can’t hear me screaming or see me simultaneously banging my head against the wall while I pull out what little hair I have left!
Here’s the reality of this all. EVERYONE buys things, including children, and EVERYBODY will pay the “Fair Tax.”
The only way this could even be somewhat fair, would be to give every single man, woman and child, not a “family unit,” this ridiculous pre-bate. That’s over 300 MILLION pre-bates every single month. Oh, and these cats assume that illegal aliens will be paying the tax, but not getting the pre-bate! One only has to look at the Treasonous Bastards™ pushing amnesty in the Senate to figure out how that will work out! So figure, what, 320-340 MILLION pre-bates a month? And of course, illegals or not, America’s population is only going to grow!
Now how are you going to get your pre-bate? The government isn’t going to force hundreds of millions of citizens to get checking accounts so they can get their pre-bate electronically transferred every month, because you need an ID to open a bank account, and well, if the democrats oppose making someone have an ID to vote [one of THE most sacred rights we have] well … you know!
So, the government will be sending out checks to millions.
BTW, even if you only sent these checks to “family units” you’re still talking way over 100 million a month!
Now I’ve had fair taxers argue with me forever that it will all be done by electronic transfer, like it will cost nothing that way. For those of us dealing in reality, we know that isn’t true. Everything government does costs a lot of money. You can figure the cost to process each and every pre-bate will be somewhere between $5 and $10 per month. I don’t care if you mail the check, or do electronic transfer.
If you do this the way it should be done, giving the pre-bate to anyone who is a tax payer [which means anyone old enough top walk into a store and buy something] you’re talking about a cost of between $1.5 and $3 BILLION every single month. JUST TO SEND THE CHECK. That’s over and above the actual amount of the pre-bate! That’s between $18 and $36 BILLION a year. I know that’s chump change in D.C., but still we can better use that money somewhere else.
Even if you only pre-bate “family units” you’re still talking between $10 and $20 billion a year. Money wasted quite stupidly.
Oh, and I didn’t include those precious illegal aliens that so many traitors in Congress are so fond of.
Not only is this a waste of money, it’s ripe for fraud and abuse.
The bunch that advertises it wants to “fire” the IRS is still giving Big Government a whole lot of situations to create problems. You can bet the amount of these pre-bates will be a political football as well!
Nearly every day we see an article about someone collecting social security and disability checks for dead people. You think that won’t happen with these pre-bates?
BTW, just exactly how much paperwork will be needed to file for your pre-bate?
Here’s what an intelligent person would do. You simply exempt certain items like food, prescription medicine, and so on, to start with. That doesn’t cost ANYTHING to process, and certainly eases the burden on the poorest among us!
It should be noted that in Mike Huckabee’s Arkansas they tax EVERYTHING, and back in 2002 taxpayers actually voted DOWN [by a huge margin] a constitutional amendment that would have eliminated such taxes. I can’t even comprehend that sort of thing!
I could go on about this idiotic “Fair Tax” but if you haven’t figured out what a complete mess it is, well, there is no hope for you anyway!
Again, some may think I’m being too harsh on our friends who are in love with this lunatic plan, but when you see something this bad, it must be taken apart. This thing defines stupid.
Besides, you’re here to read about a true, viable solution!
The 10-6-3 Tax Plan
Simplicity is the watchword when it comes to a workable tax plan. Simplicity, and of course, fairness.
Before we get into the nuts and bolts of this deal, it should be obvious that this must be done by constitutional amendment, rather than just legislation. The 16th Amendment merely gives Congress the right to tax the individual, but not how it’s done. A new amendment would be written to supersede the 16th Amendment.
The new amendment would have to not only set the rules in stone, but even the rates. In other words, once the tax rates were set, it would take another amendment to raise, or lower them. This would force Congress to live within a real budget, like the American people do.
This tax plan would have to eliminate all other taxes, like gasoline taxes, and of course, programs that corrupt courts have “deemed” a tax, in order to justify calling them “constitutional, ” such as ObamaCare.
This would NOT however, preclude the government from raising usage fees and other assessments, that are only paid when an exact service is rendered. All taxes and fees should be based on consumption or usage.
This does NOT address the payroll tax either. Our Social Security system is a mess. It’s the biggest ponzi-scheme ever put into play, but that’s another LONG conversation altogether. Once we reform the tax code, Congress’ next job should be reforming Social Security in a way that it won’t run out of money, and still take care of those government made a promise to.
I think it’s essential to keep that payroll tax in place, so workers see it every time they get their paycheck.
This is a National RETAIL Sales Tax
Nothing simpler than a RETAIL sales tax. When you buy something, you pay a tax at the point of purchase, and go on about your business! Most Americans are already familiar with this, as they already pay state and/or local sales taxes.
Under a national RETAIL sales tax, there would be no exemptions, no exclusions. No longer would tax payers be punished for earning “too much” money, and no longer would politicians be able to demagogue the “rich” or pretend to care about the “poor” while making their long-winded speeches about “fairness.”
Under a national RETAIL sales tax, absolutely everyone pays. Those people who make money “under the table?” They still pay! Illegal aliens? They pay!
10-6-3 Can Eliminate as Much as 90% of the Corruption in D.C.!
Yes, I know, a bold statement!
As I said at the start, the tax code we have now, allows for all kinds of corruption. Pet projects and pet groups get special, preferential treatment, while those deemed “undesirable” or who have the audacity to oppose what the out of control, corrupt government is doing, are targeted.
You won’t have 501 (c) groups [radical leftist or Tea Party Patriots] having to file for tax-exempt status in order to raise funds tax free, because we’ll no longer tax income. The government will no longer be able to get involved, no longer be able to violate the 1st Amendment and the right of free speech.
The amount of corruption that this will end is far too large to detail here, but anyone familiar with the tax code as well as how Washington pols operate, understands the 10-6-3 Tax will end around 90% of the situations that allow politicians to be involved in corrupt activities, and that’s a huge reason why this plan makes sense where none of the others do. All of the other plans being proposed leave too much to the politicians AFTER the plans are put in action.
What you tax, what you don’t
To be honest, I have it pretty easy. I live in a state that has a successful tax plan. It’s not hard to use the Texas sales tax as a model for the entire country. Again, Texas is not only one of the largest economies in the world, it’s also the second largest in America. [and if tax, spend, and regulate into oblivion California doesn’t change, Texas may be number one shortly!]
Like here in Texas, under my plan, certain items would be tax exempt. Food, prescription medicine, most medical care, etc.
Services would be taxed. For example, if you take automobile to the repair shop, you would pay taxes on both the parts, and labor involved.
Now while food is exempted, at the grocery store, much like it is at the state level, eating out is taxed. Go to a restaurant or fast food joint, and it’s taxed. You are being taxed on the prepared meal. [parts and labor, if you will] Tip your waitresses! [that ain’t taxed]
How successful is our tax system in Texas? Once a year we have a sales tax holiday. It’s scheduled as a back-to-school bonus, that waives taxes on clothing items and shoes, up to a certain amount, and other related items. It’s designed to give parents a break while getting ready for another school year, but everyone gets the same deal. I’ve taken advantage of it for years, as do others who don’t have school age kids. Good time to buy a new coat, that extra pair of tennis shoes, whatever. It stimulates the economy and gives people a break!
I would suggest the constitutional amendment setting the rules for the 10-6-3 Tax allow for a short tax holiday on an annual basis, once the economy snaps back. This actually stimulates retail sales better than anything Washington could ever cook up!
But wait, their ARE some exemptions
I know, I said no exemptions, but in fact, there are. This is, after all a RETAIL sales tax. I keep capitalizing RETAIL to drive that point home. As we are only taxing RETAIL, it makes sense that items bought by businesses for RESALE, would be tax exempt.
For example, let’s go back to your car in the repair shop. Whether the shop keeps parts in stock, or has to go down to the local NAPA or O’Reilly’s parts store, they do not pay tax when they purchase the parts, FOR RESALE. Only you, the end user, pays taxes. Anything else would be double taxation, and … of course … that extra tax would just be passed on to the consumer anyway. No good.
Since most state sales taxes already work this way, outlets that sell wholesale, already have tax exempt forms on file for those businesses that qualify. And to qualify, one must simply be in business, and file for a business permit. It is a minimal cost, and no hassle deal, for legit businesses. That should remain so on a national level.
The fee for a business should be well under $100 and anyone who has a current state retail business license should have absolutely no issue getting a federal one. New businesses should also have zero problems getting a permit. Again, having a state permit should automatically qualify one for the federal one. In fact, to cut down on corruption at the federal level, one should be required to have the state exemption first. [If you live in a state that has a retail only sales tax]
Now if your automotive repair shop needs equipment, tools, whatever, they’ll pay the sales tax. The exemptions are for those who are buying for resale only.
It goes without saying that restaurants and fast food joints would be tax exempt on all purchases for food items being used to create meals, for resale. Equipment, utensils, plates, etc., would be taxed.
In other words, if you are buying something with the intent of reselling it, you don’t pay taxes on it, IF you are a legitimate business.
Anyhow, simple concept, and while some people have gamed it from time to time, that’s pretty rare.
OK, now that we know, more or less WHAT we are going to tax, we need to find out HOW MUCH we are going to tax it!
I call my plan the 10-6-3 Tax, not just because every plan needs a catchy name, but because it describes the tax rates.
On most goods and services, the retail sales tax rate will be 10%. Simple round number. Not too high, just enough to raise the amount of revenue needed to fund government.
Other than the exceptions above, and the other rates I’m about to mention, everything is taxed at the 10% rate.
Again, this would replace all other taxes, such as the FEDERAL gasoline tax. Since gasoline is a retail purchase, it would be taxed at 10%, right at the pump.
Speaking of taxed-at-the-pump, items purchased from vending machines would be taxed as well. In Texas, the tax is figured into the retail price listed for the item. This would also apply to things like event tickets, and so on.
Motor Vehicle Tax
You could tax motor vehicles at the same rate as everything else, but remember, just about every state already taxes retail automobile purchases, and some states also charge almost criminally high fees for license and registration.
With that in mind, a 10% tax rate would hurt sales, especially new car sales.
A reasonable tax rate is 6%. This is comparable to what the that rate on automobile sales is here in Texas. The tax would apply to all motor vehicles. Automobiles, trucks, buses, motorcycles, RVs, airplanes, whatever. If it comes from the factory with anything but human power, you are paying a 6% sales tax. No exceptions, except, of course for municipalities, that purchase fleets for police, fire, etc. I would suggest also exempting hospitals that maintain ambulance fleets.
As this new tax is so comprehensive, it would make illegal other taxes, like the so-called “gas guzzler tax” and though we don’t have one now, we’ve seen “luxury taxes” also imposed over the years. “Luxury taxes” not only hurt entire industries, it often punished purchasers who aren’t exactly rich. Both the gas guzzler and luxury tax schemes would be unconstitutional.
One of things that will be gone, of course, is the real estate tax deduction. Now not having to pay confiscatory income taxes, or deal with mountains of paperwork, will make up for actually having to pay a retail sales tax on real estate.
Obviously homes are big ticket items and you’d be insane to suggest a 10% or even a 6% sales tax. No, you want a smaller amount. What you want is a 3% sales tax on all real estate transactions. This will raise significant revenue, without hurting sales, or the purchaser.
This tax would not only be on the sale of real estate though. Renters would also pay 3% each month. This would go for individuals renting a home or apartment, or businesses renting office or retail space. It’s a small, affordable amount for the tax payer, but a significant source of revenue.
There will be an exemption to the tax, of course. Legitimate home flippers, those who are in the business of buying homes in disrepair, fixing them up, and reselling them, would be exempt, as long as they qualify as a legitimate business.
Also, new home builders, or flippers, would be exempt from the 10% retail taxes on certain items that are directly used in the construction, or remodeling of a home, much like your auto mechanic is exempt from taxes on the parts he uses to repair your car. Remember this is a RETAIL sales tax.
Booming Economy, Billions in Repatriated American Dollars
The 50% of Americans who actually pay taxes now will have a considerable amount of extra money in their pockets every single pay-day. The smart ones will save and invest much of their money, as they should, but that extra disposable income will allow them to buy things they couldn’t afford under the current immoral and confiscatory taxing scheme.
The family driving the 20 year old beater car, because that was all they could afford, could now see themselves affording payments for a new, or almost new car. A more fuel efficient, safer, less polluting car. Or maybe that second car. Or perhaps, to save on gas, and add some adventure, a motorcycle instead!
Been wanting that new big screen TV be not wanting to go into debt? Now you can buy it without going into debt!
The potential for economic growth will be almost unlimited.
Remember all that money setting in banks overseas, not being taxed, and not being used to help grow OUR economy? Well guess what, under the current system, that money will never be taxed, no matter what, because it will stay where it is. It will never be used to invest in America either.
Under the 10-6-3 Tax Plan most of that money hiding overseas will find it’s way back to the United States, as long as greedy politicians don’t try to somehow tax people retroactively, that is. Let the money come home, and let entrepreneurs put it to work here in America, creating American jobs, and improving American lives.
I’m not an economist, so I am not going to BS you by throwing out huge predictions, but living in a successful state, with a similar tax plan, I know our tax policies here in Texas, along with lack of Big Government liberal insanity, makes Texas as business friendly as it gets, and if you don’t believe me, just look at all of the businesses and individuals that leave their failing states and move to Texas every single week!
With a few other needed reforms, America will be THE place for the world to set up shop and do business.
Oh, and don’t forget that businesses will save a ton money because they will no longer need a battalion of tax accountants and lawyers. That will be money they can use to create jobs and make capital improvements. All of which will stimulate the economy.
The United States has a few other problems it needs to address, over-regulation [bordering on the obscene] and the lack of a national Right-To-Work law for starters, but I can guarantee that taxing retail sales, rather than income, will open up the economy in ways no other tax plan ever could. And that’s the entire idea.
The 10-6-3 Tax Plan will encourage job creation, and more jobs, means more people off various government assistance programs, saving the government money, and more people with money to spend! And pay taxes! Lather, rinse, repeat. I can think of no better way to create a vibrant economy.
The only struggle will be making sure overzealous liberals don’t think up new ways to destroy businesses!
Collecting the tax and re-purposing the IRS
The system for collecting the taxes is already in place, in just about every state. Rather than having the IRS hassling individual tax payers, the burden is now on retail businesses.
As it works now, businesses in the states collect state and local sales taxes on the behalf of their states, and file quarterly reports and payments.
The easiest way for this to work out, would be have the states also collect the federal sales taxes, from the businesses, and then remit them to the federal government. That would eliminate the need for much of the IRS staff.
Now, instead of putting their boots on the necks of hard working Americans, the IRS’ entire focus would be on making sure retailers remit the taxes collected on their behalf. Though there will always be those who try to skip out, it’s a much, much smaller problem.
In short, retail businesses will collect the retail sales taxes. When you purchase an automobile the county tax assessor gets the money. If you buy at a dealership, you pay the tax to the dealer, the dealership, in turn, pays the county. The deal here is the automobile isn’t registered in your name, until the taxes are paid. Not a lot of problems with this system! Of course, if you buy a car from an individual, you’ll have to register it, so YOU pay your state and federal sales tax at your county tax office.
Real Estate sales would be similar. You buy a home, you have to go through a title company to get the deed. You’ll pay that tax through them.
The only new thing would be renters. The easiest thing would be to handle that through the states as well.
I’m sure there will be studies done to figure out the best way to handle getting payments from retailers to the IRS, but for the most part, the infrastructure is already in place to do so efficiently.
As for the IRS, the scope of it’s job will be dramatically changed. It will go from dealing with individual Americans to a business-to-business type of situation. There will be little to no opportunity for situations to arise that can be corrupted.
Getting this new, improved way of taxation in place, won’t be easy!
What ever tax reform you’d like to see happen, none of the reforms will come easy. Governments LOVE to grab power and take away Liberty and Freedom, but are loath to give power back, or restore Liberties and Freedoms lost. Even a simple flat income tax will take a herculean effort to get passed.
The battle to replace the income tax with the better 10-6-3 RETAIL Sales Tax, will look a lot like WWIII!
Never mind all of the attorneys out there who Americans will have less need for. Big accounting firms, and firms that prepare income taxes for businesses and individuals [because the code is too complicated for many Americans to comprehend] will lobby hard to stop the 10-6-3 RETAIL Sales Tax from every being implemented. The same goes for that idiotic “Fair Tax” as well, as it replaces the income tax with a sales tax. The “Fair Tax” is comically complicated but I doubt any tax payers will need an accounting firm to assist them in paying it. [or filing for that idiotic pre-bate]
Also, since the 10-6-3 RETAIL Sales Tax eliminates as much as 90% of the corruption, takes away the politician’s ability to favor certain projects, or use the power of government to force social engineering on society, you can bet than many, in both parties, will fight this reform with every ounce of their soul!
There’s also a rather high constitutional hurdle to overcome, as there should be. Not only will 2/3 of both Houses of Congress have to support it, so will 2/3 of the states. This won’t be easy to get done, nor should it be. The good news though, is once the Constitution is amended to put the 10-6-3 Tax in place, it will take another amendment to change it, and that includes the tax rates.
This is how all major changes to America should be done. It’s how ObamaCare should have been done. Anything that fundamentally changes America should be done by constitutional amendment only.
Are you listening amnesty shills? I’m talking to you!
This will take YOU
Some of the other plans already have big support, and in the case of the “Fair Tax” a massive PR machine. I don’t have any of that. This is simply an idea, at this point, and I think it’s a damned good one. One that will fund government without harming the individual. It’s a plan that requires all Americans to participate in, but won’t hurt the least among us.
If you like what you see, share it with your friends and family. You can also pass this article along to your representatives in Congress. Post the link around on websites, and so on.
One thing is for certain, we cannot continue going down the same road we are on now. Government is corrupt, almost beyond redemption. Politicians are only as good as the situation allows. The best way to stop the corruption is to remove the situations that can be corrupted. Out of all of the plans out there, the 10-6-3 RETAIL Sales Tax seems to be the one that best removes the politicians’ ability to corrupt it.
How about it? Let’s get this plan put in place, and get America back on her feet!