Friday, September 4, 2009

Taxes!

Yep. One of the most hated subjects there is. They are a necessary part of a functioning society though. Here in the US it is time for a change. I believe it is time to once again do away with income tax completely. You do realize that this country did not have a full time federal income tax until the 1900's? It is far to easy to manipulate and evade and quite simply does not work fairly. I believe that the answer to a large portion of our financial challenge would be a federal sales tax. Yep, I said it and here are a few of the reasons I believe this is the way to go.
The under the table cash society that currently exists instantly is of no consequence. Illegal immigrants working for cash, will now pay taxes on the spending that they are doing here. The illicit substance trade, while not condoned, will be taxed when they spend that money on the goods they purchase.
The very wealthy people that hide their income in any one of a variety of ways will no longer benefit from doing so, they will be taxed at the same rate as anyone else when they go to spend all that hidden money.
A huge reason is this: While a person is earning, saving and investing, the person would have more money to save and invest with due to not losing 20%+ of their income before they ever get it. This would encourage investments and increase available funds to be spent. That in turn would increase the funds that the individual has for spending which in turn would enable the individual to spend more and thus increase the total tax gained from the individual all while being done at a lower taxation rate and the same income level.
The IRS and tax support entities would still be employed just in a different manner. There will need to be regulation and enforcement on the businesses to accurately collect and submit the taxes on sales. Also international sales and trade would have to be monitored and due taxes applied.
Items such as necessities and food would be taxed very lowly, and medical services and goods would be able to be tax free.
Implementation would be tricky of course, but any change will be challanging. For instance, I believe an exemption voucher type system would need to be implemented. The reason for this is say you have 100,000 dollars in savings. You should not have to pay taxes on this money, you were already taxed. So you should have a voucher system to exempt you from the federal sales tax for 100,000 dollars worth of spending.
Is the idea here perfect? Of course not, there is no perfect taxation system. This is much better, and by far more fair than what we have in place now. But it will take a major effort to affect any changes at this point. Just wanted to send some food for thought.

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