i for one am in favor of abolishing the IRS completely. i'm convinced a more inefficient and backwards institution does not exist in the US. sadly, though, the best solution i have seen proffered is the fairtax http://www.fairtax.org/ (which has, sadly, been hitched to the tea-party horse). the fairtax is a consumption tax (basically a sales tax, but stated as inclusive like the current income tax not exclusive like state sales taxes) on any new final goods or services within the US.
a consumption tax, however, is the most regressive form of tax in existence. so to combat that, you do simple math. every citizen receives a something they call a prebate, a check in the mail or direct deposited for the amount in taxes up to the poverty level at the beginning of each month (about $200/month). no individual pays taxes by filling out a form, they only have a yearly form to fill out to receive the prebate. all taxes are collected at the point of sale (used goods are exempt) reducing compliance costs and the incentive to tax dodge. so illegal immigrants pay taxes without getting a prebate. corporations that manufacture within the US but export their goods do not. corporations that import goods do. tourists pay taxes. people who are crazy and live off the grid do not. SS and medicare are not collected separately. investment is not taxed. and it's price and cost neutral (that is, the myriad taxes we pay but don't realize: SS, medicare, income, payroll are already hidden in the price of everything we buy and this just makes it transparent).
as a libertarian that knows markets fail all the time, i believe the policies should be dynamic and robust. that is, use the reduction of the market to make quick and dirty decisions and heavily regulate those areas that are prone to failure (or just prone to negative externalities while promoting the positive externalities). enough with the waffling centrism—certain things need to be as libertarian as possible while others, particularly dealing with OPM (other people's money) and general welfare of individuals need to be as socialist as possible. and i am fairly confident that that will never happen. alas
I agree with the concept of moving towards a flatter and simpler tax structure. The problem with any new tax proposed as a replacement for another tax: far too often the new tax gets passed, and repealing the old tax conveniently gets forgotten. And when the issue comes up, suddenly a pile of programs people supposedly care about couldn't possibly survive without the new revenue.
Speaking as someone who has seen a pile of new taxes go by and old ones rarely leave. Here in Oregon, we finally enacted a pile of protections against the continuous ballot measures demanding new taxes, such as a cap on how much property taxes could go up per year (no more than inflation), as well as a requirement for a 50% turnout in an election to pass a tax (no more special-election surprise taxes). It also helps that Oregon requires a balanced budget, which means that when the economy goes down, the local governments have to (gasp) spend less (and plead for money, which they usually do) rather than spending more and later demanding money to pay debt.
In other words, you would replace the IRS with the PRS (pre-revenue service)? And Main Street with the Back Alley, where you pay no taxes at all? And incentivize export businesses over domestic businesses (b/c exported goods are never taxed)? And over-incentivize capital investment even more grotesquely than it is now with a mild capital gains preference?
There's a reason the Fair Tax was DOA. It's an over-engineered solution that's worse than what we have right now.
for tl;dr—this is exactly the type of reaction i expect from those who don't stop to think deeply before punching out a response. there is no real content in your reply, only distraction.
In other words, you would replace the IRS with the PRS (pre-revenue service)?
no, i would abolish the IRS and repeal the whole damned tax code and start over. if PRS is what you would call it, i am partial to http://www.prsguitars.com/
And Main Street with the Back Alley, where you pay no taxes at all?
used goods would not be taxed since they were already taxed. and back alley deals will always be there—so what. better to keep however many million companies in line than 300 million people plus however many million companies. it lowers the tax burden, which is more efficient, which swamps any extra back alley deals that may take place under a consumption tax than the current labyrinthine code.
And incentivize export businesses over domestic businesses (b/c exported goods are never taxed)?
you do understand that we are a net importer of goods (though far and away a net exporter of ideas)—this means that we consume more goods at home that are not made here than we make and send abroad. i'm no rabid proponent of balanced trade, especially since our ideas are worth far more than a million trinkets from emerging markets, but making our goods more competitive in a global market can foster actual manufacturing jobs (remember those?), especially when the cost of labor in the east starts to be less of an advantage for those countries.
nevermind that we have an economy that relies mostly on non-exportable services and manufacturing has by and large left our shores, on to the highly flawed rhetorical question to which i must respond: a hypothetical export company has to pay taxes on equipment and supplies to do business, and has to employ people who purchase goods and thus pay taxes, only those items which are non-finished goods are not taxed if exported. most primary and many secondary goods are non-finished goods (think rubber for primary and tires for secondary—the tires on the new vehicle are taxed as part of the whole vehicle, the tires you by at tirerack are taxed when you buy them).
now imagine a global brand that still has manufacturing in the US as well as in other places around the world wants to build a new factory that serves north america. it might build in mexico, where the lower cost of labor offsets the higher cost of shipping and dealing with another imperfect government, then all of the goods it sells to the US (it's biggest customer) will pay taxes to the US and all the goods it sells in mexico and to canada pay NO taxes to the US. now imagine the scenario that the company decides to build here in the US—it pays higher labor costs but can keep a closer eye on manufacturing that makes it worth it. it employs several thousand people, pumping a quarter of a million dollars into the pockets of americans that end up supporting many other ventures that have no relationship to that company. and guess what, it pays NO taxes to the stuff it sells in mexico and canada. which would you prefer? oh, that's right, option 3 where said company never bothers to consider the US because it would pay tons of taxes on those goods sold elsewhere, all the while lobbying to congress for a tax break.
And over-incentivize capital investment even more grotesquely than it is now with a mild capital gains preference?
first, why should anyone ever be taxed for investing in the future?
second, do you understand that in this model, the investment would fund the purchase of goods and services which would employ people and pay taxes—around the world, not just in the US? do you understand that the benefit to the world of more investment is greater than houses of cards sometimes built with that investment? do you know that the fruits of investment has raised the standard of living such that i can type something of a didactic diatribe via a high quality laptop to some stranger that doesn't understand economics.
third, the capital gains is a clusterfuck, like everything else dealing with taxes.
There's a reason the Fair Tax was DOA
tell that to the people who are still supporting it. and if it does eventually become DOA, it'll be because of the beloved lobbyists and special interest groups
It's an over-engineered solution that's worse than what we have right now.
> the best solution i have seen proffered is the fairtax http://www.fairtax.org/ (which has, sadly, been hitched to the tea-party horse
It's too unfortunate that the Tea Party has become associated (rightfully) with people who have no real goal besides screaming a lot about healthcare insurance.
The original ideas, which I would credit Ron Paul with starting, are still valid.
On the fair tax though, I believe Ron Paul does not support it.
a consumption tax, however, is the most regressive form of tax in existence. so to combat that, you do simple math. every citizen receives a something they call a prebate, a check in the mail or direct deposited for the amount in taxes up to the poverty level at the beginning of each month (about $200/month). no individual pays taxes by filling out a form, they only have a yearly form to fill out to receive the prebate. all taxes are collected at the point of sale (used goods are exempt) reducing compliance costs and the incentive to tax dodge. so illegal immigrants pay taxes without getting a prebate. corporations that manufacture within the US but export their goods do not. corporations that import goods do. tourists pay taxes. people who are crazy and live off the grid do not. SS and medicare are not collected separately. investment is not taxed. and it's price and cost neutral (that is, the myriad taxes we pay but don't realize: SS, medicare, income, payroll are already hidden in the price of everything we buy and this just makes it transparent).
as a libertarian that knows markets fail all the time, i believe the policies should be dynamic and robust. that is, use the reduction of the market to make quick and dirty decisions and heavily regulate those areas that are prone to failure (or just prone to negative externalities while promoting the positive externalities). enough with the waffling centrism—certain things need to be as libertarian as possible while others, particularly dealing with OPM (other people's money) and general welfare of individuals need to be as socialist as possible. and i am fairly confident that that will never happen. alas