Friday, December 21, 2012

Let's Close the IRS and Eliminate the 1040

Here is a lateral thinking idea that could make our country great again. Let's get rid of the IRS. We can replace revenue with a national sales tax. This tax could be piggybacked on top of the state sales tax that most states have so we could do away with one entire level of bureaucracy and make the government more efficient.

"No More 1040 Filings"

Think about it. Former Treasury Secretary Paul O'Neill recently said that the cost of administering the IRS alone is over 400 billion dollars a year. Not to mention the annual drudgery of collecting all the data and the expense we as taxpayers do to comply with the Byzantine tax code.

We could have one simple tax, which we pay each time we spend money and eliminate all of the complexity of annual tax filings. We could exempt things like food and medicine to help the economically disadvantaged. The wealthy would pay more since they spend more money. We could keep the estate tax to redistribute money from extraordinarily wealthy people like Warren Buffet and Bill Gates.

If we had a national sales tax, then everyone would contribute to the cost of government and we could end the class warfare that politicians exploit for political gain. We could adjust the amount of the tax on an annual basis to pay for the cost of government. And the best thing is, every time a politician suggested new entitlements, everyone would have to contribute towards their cost. We would have no more "give me this and make the other guy pay for it" proposals.

Government programs cost money, but the current program obscures those costs. A national sales tax (not a value added tax which hides taxes) would force everyone to viscerally feel the cost of government. And only then can we have sensible debate over what social programs we should ask everyone to pay for.
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