Thursday, February 10, 2005

Taxes and the IRS

We all know about the IRS. Those dirty buggers that take 28% or more from our paycheck.
We also know that the IRS doesn't follow its own laws. The withholding process is "for our convenience" and paying or participating in the income tax is voluntary.
How, then, are we compelled to pay tax?
Well, the IRS is not abiding by the laws as set forth in their own code (IRSC), and we have allowed ourselves to be tricked. We simply believe everything we have been told by the government, which is foolish, and we never bother to check out things for ourselves (mostly because the laws are too complex for the average person to understand)
"...when human laws contradict or discountenance the means which are necessary to preserve the essential rights of any society, they defeat the proper ends of all laws, and so become null and void." Alexander Hamilton, "A Full Vindication of the Measures of Congress", Dec. 15, 1774.
I used to have a quote, from one of the Founding Fathers (I believe) that basically stated that if the law becomes too complicated or complex that the common many cannot understand it, then it becomes null and void. (if anyone knows this quote, please send me it).

We could go along the lines of Mr. Shiff, although, it does not seem like that has worked out so well for him...
http://www.paynoincometax.com/

or we could learn a little something about the law:
26 CFR Sec. 31.3402(p) Voluntary withholding agreements

There are many other interesting places to learn about this law, but you have to wonder, wouldn't it just be easier to change the tax law to something more understandable and fair?
Sure, people will claim that the rich pay most of the taxes...but fair means that we "pay our fare share"...so if I am being taxed at 30%, and I am middle income, then the rich and poor should also be taxed at 30%. But as y'all may or may not know, people like Bill Gates pay like 4%, and the poor pay nothing.
So, what are we to do?

Well, we could levy a flat tax. This is where everyone pays 8% (or whatever, I like the numbers here)...
This is how it would break down...

Currently, I pay 30% in tax (it is actually something like 28% to 34%...so I will call it 30%)...
$75,000 = $22,500 in tax
Bill Gates, well, lets say he makes 1,000,000 a year(salary) (not unheard of, since he has a net worth of about 63 BILLION) and in investments earns $125 million. (latest figures I could find). And he pays about 4% in tax...
$126,000,000 = $5,040,000 in tax
The government now has $5,062,500 in tax revenue.
Now if we move to the 8% tax flat rate, here are what the numbers look like...
$75,000 = $6,000 ($16,500 in savings)
$126,000,000 = $10,080,000 ( $5,040,000 in expenses)
and the government has $10,086,000 or an increase of $5,022,500...
What this means is, the government needs about $5 million to operate, and now has a surplus.
The tax burden could be reduced from 8% to something more along 5%. Billy wouldn't notice, yet I would get an extra $18,750 in my pocket, or the price of a new car (which I could badly use)...

However, there are many problems with a flat tax...I have had several people explain the problems to me, I just cannot remember them right now...

But the argument always comes down to "the rich won't pay the extra..." and "the government/irs won't be willing to do away with status/jobs, etc..."
So, How about a sales tax?
This way, every individual and corporation pays a fair tax. This would also impact fewer people as those with money purchase more (pay more tax) and those without money purchase less (pay less tax).

I also believe the only way to fix the broken government system is to do a complete overhaul...figure out what offices really need to exist to run the country, staff those offices with the minimum number of necessary bodies, provide for the government employees and people's representatives in the same way that people (us regular people) are provided for (no special programs)...
Restructure the salaries for "public servants" at the state level to represent the average salary of that state, and at the federal level to represent the average salary of the US Citizen - for that time they are working. Force a vote of the people to raise those salaries and to create new positions in government. This would force the government to be honest about the programs, their need and their impact. This is called Open and Honest Government (so it won't happen, but it would be nice).
Reduce or eliminate federal social services...have the states take up that burden.

There are more ideas, but they are, as of now, not fully congealed in my mind...

Oh, and you would also have to really institute fair trade, and slap import tarrifs on EVERY product (foreign or "domestic" that is imported into this country - just like the Constitution says)...

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