Replace IRS with FairTax proposal
We need to consider a different tax system.
Our current system requires 7 billion man-hours per year to comply with all the forms.
The equivalent of 3 million Americans work full time to do the tax system 's busywork -- filing, accounting, reporting, litigating.
It is intrusive, allowing our government to know personal information we don 't normally share.
With over 67,200 pages, it is extremely complex -- so much so that when various accounting firms calculate one family 's taxes, they get different answers. And the penalties for making errors on your tax form can be excessive.
The inception of our tax regime allowed the massive growth of our government. The control we have allowed Congress is a blank check for them to fight over.
We see evidence of this every time a national budget is created. And then there is something called the tax gap.
According to a three-year study by the National Research Program: "In 2001, the average taxpayer paid $8,265 in taxes. With an estimated tax gap -- which is the difference between what taxpayers should pay and what they actually pay on a timely basis -- of $345 billion. This means that the 130 million taxpayers paid on average $2,649 more in taxes to subsidize the unwillingness or inability of some taxpayers to pay their fair share. In other words, if everyone paid the taxes they owed, average individual income taxes paid per taxpayer could have been 32.1 percent less. "
The 7 billion hours we spend with our tax code also carries a monetary expense. According to the nonpartisan Tax Foundation: "This year, individuals and companies will spend about $300 billion on tax preparation costs. To put that in perspective, that is a 20 percent levy on top of the $1.5 trillion they will actually pay in taxes. Some 60 percent of filers -- including IRS Commissioner Mark Everson -- will pay a professional to do their taxes for them. "
So, we not only have to pay taxes, but compliance costs for calculating those taxes.
A major lie in our tax system is that businesses pay taxes. The point of being in business is to make a profit. Without a profit, the business fails and jobs are lost.
Consumers pay for all expenses including taxes. If not, then where does the money come from? A business normally has one source of income, consumers or other businesses. The corporate tax is like a value added tax in that the cost is added to and hidden in the price of the product.
Most economists agree that the employer 's share of the payroll tax is actually taken out of the employee 's wages. The employer calculates what he can pay you with the payroll tax added in. He then makes an offer to you minus his payroll tax.
This is immediately obvious to small business owners who are familiar with accounting. It becomes blurred in larger companies.
The alternative to the current system is called the FairTax. It replaces the income, payroll, corporate, gift, estate, capital gains, alternative minimum tax, and self-employment taxes with a national retail sales tax.
Because it removes all of those other taxes, the prices of goods and services will not go up. The FairTax means that you take home your gross pay. It means a raise of more than 20 percent for those paying income taxes. You never fill out another federal tax form.
The FairTax also has a monthly pre-bate. The intent of the pre-bate is to ensure that the poor pay zero federal taxes. It should be assumed that once the FairTax is passed we will have to eradicate the 16th Amendment, which allows Congress to levy an income tax.
Ose lives in Wisconsin Rapids. This commentary was originally published at http://www.madison.com/wsj/home/opinion/281407