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Monday, April 16, 2018

Let Tax Day 2018 Be The LAST Tax Day, EVER! Enact the FAIRtax!

By LUDWIG VON KOOPA - An income tax cut is great and all, but no income tax altogether is even better!

Just in case you're confused or not American — the Tax Cuts and Jobs Act of 2017 (President Donald John Trump's substantive tax cuts bill passed at the end of 2017) applies to next year's taxes, or Tax Day 2019. Tax Day 2018, which covers the taxes for calendar year 2017, isn't changed by the legislation.

If you look at the KoopaTV article on that tax cut legislation, you'll read in several places me bemoaning that it's not the FAIRtax, which is a national retail sales tax that replaces the income and payroll taxes. For a little more information, take a look at this quick video:
 

For a lot more information, including FAQs, lots of research (the FAIRtax is said to be the most researched tax legislation in the history of humanity), and more, check out the FAIRtax website at fairtax.org. (Note their use of the best top-level domain.) Meanwhile, I'm going to spend this article telling you why I think the FAIRtax is the best tax plan and what America needs — and if implemented, there will never be a Tax Day ever again.

Update April 17, 2018: The IRS payment systems glitched up and people couldn't actually pay the IRS money today, so they're extending Tax Day to April 18th. I mean... they're making our argument for us that they should be abolished. /end update

What's wrong about the income tax


Let's review the facts. First of all, the existence of Tax Day to begin with is because of the income tax. You need to fill out a form to the Internal Revenue Service reporting all of your sources of income. If you don't do this in time, you're in trouble. If your information is incorrect, you're in trouble. If you don't understand the extremely complicated rules surrounding taxes, you're in trouble. You can hire an accountant, if you want, but those are pricey compliance costs.

You're working all this time, all year, only for a lot of it to not matter because the government decides that it's entitled to your income, and therefore entitled to know how much your income is and where it comes from. The fact that next year they'll be taking less of it doesn't change the fact that the government is still picking your pockets, and is invading your privacy by knowing your life's work. And they do this for everyone. Total police state.

Herman Cain 9-9-9 the movie government bureaucrats contraption taxation is theft
Government bureaucrats invading your privacy and your wallet.
TAXATION IS THEFT!
(Image credit: 9-9-9 the Movie by Herman Cain.)

And if they decide that isn't enough, they can arbitrarily audit you by the force of a gun! And if you doubt the capability for the IRS to ruin and abuse INNOCENT PEOPLE's lives, go watch “Unfair: Exposing the IRS” sometime. Probably by DVD at this point. Maybe you can stream it somewhere, or get it from your library. The point is that this isn't just my paranoid moanings. It can happen to anyone doing something even perceived as slightly out of the ordinary, like adopting a kid from a foreign country or starting an action group.

It's important to note why the tax code is so complicated. For the past one hundred years (note that the income tax didn't exist before then, and the United States was doing pretty fine), politicians greatly expanded the thing to tax more and more people's income (to get more and more information and dirt on them) and tried to socially engineer the population or give kickbacks to their big donors and interest groups in the form of specific tax deductions, subsidies, and credits

The complicated nature of the tax code even scares businesses from other countries away. Two years ago, I gave the story about how Nintendo could have been frightened from doing digital downloads because of how nutty the tax code is. Gaming would be a lot different today if that happened. Speaking of which, no, even gamifying the tax forms won't make the income tax morally right. Taxation is theft.

What's right about the FAIRtax


FAIRtax you decide what's fair not them grinning happy cartoon man
I'm telling you it's fair.
You get to decide whether or not you agree.
(And you better agree!)

The IRS is the starting point for all other government abuse. A flat tax would get rid of the favours politicians dole out to special interests, but it would not get rid of the IRS. Only the FAIRtax would do that. The FAIRtax, if enacted, would be collected for all new purchases, by the retailer or services provider, and then the retailers/state governments would hand that off to the federal government's Treasury Department like the state-level sales taxes are currently collected today. No more IRS. No more audits of taxpayers. (If a business is trying to commit tax fraud, that's easier to identify since there are less businesses than individual taxpayers. Also, there is a monetary incentive in the FAIRtax law that reimburses businesses/states for the compliance costs of remitting money to the Treasury.)

Since there are no income taxes or payroll taxes with the FAIRtax, you would get the full value of your paycheck. You shouldn't be worried about how you'll pay for a new sales tax, because you'll have much more money to spend with.


PLUS, there is a monthly prebate, calculated by the poverty level and the size of your household. The idea is that you'd get money to off-set the sales tax on essential goods up to that poverty line, so it's actually a progressive tax (rich people pay a higher percentage than poor people, who could pay zero or even negative). Without this critical feature, you'd run into the common rebuttal that sales taxes hurt the poor far more than the rich because they spend a greater percentage of their total income, and this is undesirable. With the prebate, that's thoughtfully taken care of.

The benefits of enacting the FAIRtax would be wonderful for America. Compliance costs and time wasted on income taxes would be freed up. You would no longer be depressing productivity or capital formation, so you'd get economic growth — higher wages and more jobs. The government wouldn't be picking winners and losers.

And then we never would need to have this discussion again. KoopaTV could write about non-tax stuff on this day next year!

Be sure to write to/call your Congress person in the House of Representatives (look up who they are here) and your two Senators and tell them you want the FAIRtax! After all, President Donald John Trump has already spoken of there being a “phase two” for tax reform. Let the FAIRtax be that phase two! There's a will and a way!


It's a fact of life that no one comes to KoopaTV hoping to read about tax policy, but it's important to discuss this subject every year because it affects so much more than you probably realise, including the stuff that you would rather read about like videogames. Don't ask what Koopa Kingdom's tax policies are — they're nothing like this. If you're not an American, your takeaway is that America's tax system has the potential to kick your tax system's ass, if only the government were to do the right thing.


KoopaTV would rather distribute untaxed money to its employees as a bonus rather than mere tax savings.

7 comments :

  1. I didn't want to comment, but you leave me no choice!
    "KoopaTV could write about non-tax stuff on this day next year.!"

    Taxes, that's an interesting subject. At face value, the FAIRtax sounds like a really good idea. Actually having businesses assist with taxes sound like a dream, and having it replace income taxes only make it better.

    Fortunately, I have no idea how taxes work (although I do find satisfaction in paperwork).

    I don't have much constructive to say. FAIRtax sounds very bipartisan, and could really help to eliminate the pain known by many American families.

    ReplyDelete
    Replies
    1. Maybe I should make typos on purpose to get more comments?

      The FAIRtax not only has a pretty face, but it also has a lot of personality when you look deeper into its soul. It wouldn't be the most studied and researched tax legislation ever if it wasn't.

      If you like paperwork, then you might not like the FAIRtax because paperwork is cut. If you're an environmentalist, however, and want to reduce paperwork... then the FAIRtax is a big benefit to that cause!

      Delete
  2. Thank you for your comment Nandin. I am a Director with Americans For Fair Taxation an all volunteer non-profit that support FAIRtax. Now taxes are not under your control. You make it they take it. Under FAIRtax they are completely under your control. Spend up to poverty level ($24,240 for a 2 adult household) and $0 in tax unreimbursed. Spend over that pay 23 cents on the dollar inclusive in the price of tax. Done.

    ReplyDelete
  3. MANIFEST DESTINY and THE FAIRtax
    I recall hearing about Manifest Destiny in history class as having been associated with western hemisphere protection and the gunboat diplomacy of Teddy Roosevelt. But the founding fathers had a little different definition. John Adams for example wrote, “I always consider the settlement of America with reverence and wonder, as the opening of a grand scene and design in Providence for the illumination of the ignorant, and the emancipation of the slavish part of mankind all over the earth.”
    In sum the writings of Adams, Washington, Madison and others makes it clear they felt themselves to be a part of what Jake and Elwood would later describe as “a mission from God.”
    As far back as Washington's Farewell Address, he was warning of “entangling alliances” in military terms, but left the door wide open for mutually advantageous trade. Indeed the march of world GDP in constant dollars (2010) has gone on unabated since that time and accelerated rapidly since 1960 from 10 to 75 Trillion. One might say the greenback dollar has been our best ambassador over the years, gunboats, not so much.
    Against that backdrop, say hello to the FAIRtax. The FAIRtax has so many advantages compared to the Income Tax, but for the purposes of this article, let's isolate its advantages with respect to
    international trade. The FAIRtax removes all impediment to business: • No tax on business inputs • No corporate income tax • No tax on capital gains • Permanent holiday for repatriation of overseas profits It is the last point that relates to Manifest Destiny.
    Imagine what happens when on January 1st whenever the FAIRtax is passed, when all strictures on business and production go away. While we do not know with any precision, how many dollars are hiding out in overseas accounts, it has been estimated that anywhere between $2 and $10 trillion would come flooding back to the United States in short order. In the mid-nineties, then Chairman of the House Ways and Means Committee, Bill Archer, commissioned a study of several hundred CFOs of Fortune 500 companies (multi-billion dollar companies with an international presence). The question was, “what would you do if the U.S. replaced the current income tax with a national consumption tax?” 80 percent of them said they would build their next plant here. 25% of them said they would move their corporate headquarters to the U.S.
    If that scenario became reality, think what that would mean to the flow of international investment. That sucking sound you would hear would be world-wide capital investment flowing one way. If the nation that is already the big dog on the block begins to welcome capital to that extent, wouldn't other nations have to follow suit with similar national consumption taxes out of self defense?
    So the relation to Manifest Destiny goes like this – Leading the way on a national consumption tax would be the fiscal equivalent to the “shining light on the hill” that our founding fathers envisioned as they drafted the Constitution.
    From my vantage point as moderator and editor of a couple of FAIRtax related social media pages, I see membership inquires coming in from India and South America and The Peoples Republic of China. I have accepted those people because I believe a national consumption tax such as the FAIRtax would advantage every living person regardless of ethnic background and nationality.

    Hopefully Americans, who, after all carry the innovation gene, will be the first to see the light of not merely tax reform, but outright tax replacement.

    ReplyDelete
    Replies
    1. Just so everyone has full disclosure, this comment is written/copy-pasted by an Americans for Fair Taxation guy.
      https://fairtax.org/articles/manifest-destiny-and-the-fairtax

      Anyway, thanks for providing the international business perspective!

      Delete
  4. The current FICA tax rate is 7.65% and when you include state and federal unemployment taxes, a person's net pay goes down even more. It would be nice if gross pay and net pay were equal, but I do not think this will happen anytime soon. Abolishing the IRS is almost an insurmountable task alone. Unless the president is able to pass his supposed 2nd phase of the tax bill before the midterms, I am not sure that he will be as successful in achieving this goal.

    ReplyDelete
    Replies
    1. Abolishing the IRS is part of the FAIRtax legislation. They give a ~three year sunset period in the bill.
      For more information: "Isn't it a stretch to say the IRS will go away?" https://www.youtube.com/watch?v=xZlgKTJJ2gM
      Who knows what the political climate will look like after the midterms happen, but the FAIRtax should have support among members of both parties if their real objective is making the lives of Americans better.

      ...Sadly, many politicians in both parties are in it for their own power, not for the people.

      As you mentioned, the FAIRtax would make gross and net pay about equal, unless you have any other deductions from your paycheck by your employer for some reason. That said, worrying about pre-tax money and post-tax money with paycheck deductions wouldn't be a thing anymore. That's another example of how the current tax system warps people's behaviour to doing things like trying to reduce the amount of money they take home.

      Delete

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