Taxation is a common issue on consumers' minds; such that an American citizen is dubbed simply, a Taxpayer. Tax is a nightmare for the taxpayer... with tax time comes premonitions of stacks of forms and days of paperwork; even internet tax systems offering simplified processing of tax paperwork take hours at a time, and such services are often costly. Millions of dolllars are made yearly by corporations offering tax services... a money pit for consumers. The American tax code is the lengthiest in the world; printed into reference books, the stack reaches above the shoulder of an average man. (Picture and caption courtesy of Wikipedia.org)
My brother Andrew told me about a new tax system proposed to congress: replacing all federal taxes in America (income, property, capital gains, etc.), the new code would instead place a simple 1% tax anytime money changed hands; for example, your employer pays you: 1%; you put it in the bank: 1%; you take out some cash: 1%; you buy something: 1%; repeat. In total that is only 4%, way lower than the approximately 30% taken by income tax (check numbers). The system was turned down by voters because they thought that it would go alongside income tax, instead of replacing it; many employees in the IRS who would lose their jobs and companies like H&R Block, whose consumer markets would be eliminated by this system, not to mention independent tax "specialists" and tax lawyers, also influenced the denial of this proposal. It sounded great to me, but I would add a few rules: the transactions only need to be reported by the businesses in all amounts; ergo, your employer, your bank, and the store tack it onto the total, and pay it; corporate transactions are also covered. Individual-to-individual transactions only need to be reported over $100 by both parties; violators get the tax jacked up to 50% for the transaction, and the tattletale gets a 5% cut; a false alarm means the tattletale has to pay that 50%, and the original parties split the 5%. All fair? Violations include dividing up payment so that each transaction does not need to be reported, but the total amount SHOULD; differentiating between separate transactions and tax aversion would be determined by the IRS.
Corporations and businesses are similarly affected. (Research taxation by profit divided by employees)
Donations and gifts are not taxed, but must be reported anyways, and delared as such; both parties must confirm, legally, both that it is really a gift or donation and that they know what will happen if caught.
Tax deductions are eliminated; I know a lot of people still like getting refund checks, and how they won't like losing them. But do you know what the money in those checks is? You money the government has been holding, interest-free, the whole time. With the new system, citizens can control how much tax they pay by simply limiting their transactions. Though this system will save money on processing and fines, it might reduce gov't revenue because people move their money less; see article on government for how I'd fix that
