Quote:Nothing to discuss. You and I have established a few times now that we agree more or less completely on this. Taxing income makes it far too easy for the outliers of society--rich and poor, citizens and illegals--to invent various ways to cheat the system, and the IRS is such a bureaucratic nightmare/political weapon that the overwhelming majority of them will get away with it indefinitely. Go back and read some income tax horror stories from the late '90s and early '00s, when welfare recipients living in Section 8 housing freely admitted to, even bragged about, having four or five families claim the same child as a dependent to get the $3,000 (I think that's what it was at the time) tax credit per kid and walking away every year with welfare and a tax refund. Something is wrong there.

 

Likewise, it's far too easy for the upper-middle and upper classes to shovel their money to overseas tax shelters and not declare it as assets on their return. There are plenty of other tax schemes used by the wealthy, but as Warren Buffet put it, when he's paying a lower tax rate than his secretary, something's not right.

 

Consumption-based taxation is the logical solution. Get rid of the antiquated income tax system and replace it with one that is virtually impossible to cheat. Make it nice and simple, too. 25% sales tax across the board for everyone on everything. States can add up to an additional 7%, and municipalities up to another 3% for a maximum tax rate of 35%. People can still apply for various "credits". For some of those credits, like a home buying incentive, the credit would be taken out of the final tax figure. For others, like a credit for a child, the government would issue a payment. Because there aren't any more bloated, complicated tax codes requiring an army of accountants just to figure out, the IRS would be able to significantly downsize its pencil-pushing force and add more investigators, allowing it to audit a much higher number of claims. Things like, did you claim a resident credit on a home you're renting out? Do you actually have the seven children you claim to?

 

The laws for circumventing or cheating the consumption tax would need to be harsher. Businesses might be tempted to cheat, and there would need to be crippling penalties for that. Falsifying an application for a government refund, like claiming a child you don't have or credit for home improvements you didn't make, should be punishable by prison time. What good is overhauling the tax system if you're going to continue to allow societal outliers to cheat it?

 

I don't think this country is ready for a flat consumption tax yet. While it is certainly more fair, it would likely result in an increase in tax dollars going to the government, with a vast, vast reduction in the number of credits and refunds offered. The majority of the voting base of one of the two major parties would scream bloody murder against losing their refunds, and the upper crust of the other would be quietly outraged at their inability to loophole their way out of it. Consumption tax is ultimately the only way to go, imo. The income tax system is too bloated and broken to remain viable long-term, the tiered structure doesn't adequately account for the income gap, and it allows too many people to weasel their way out of paying what they should. Ditch the income tax, overhaul and downsize the IRS (and stop using it as a political weapon) and bring on a consumption-based tax that will probably cost you more, but is a fair way of making everyone pay their share. It might even encourage more fiscal responsibility in Americans--that $1,000 TV you can't afford now has a $350 sales tax on it...better look at a smaller one. That $30,000 car you can't afford? There's a consumption tax of over $10,000 on it. How about that $22,000 certified pre-owned model on the same dealer's used car lot? You know, the one with 8,000 miles that's a year old?