The United States has been experimenting with an income system since 1913, so we can now draw some valid conclusions about whether this type of tax system has worked.
What we have is merely 98 years of a gobbledygook accretion of ad hock provisions that no one in the Congress, the administration, or the Judiciary understands.
To sum up, the income tax system created for an economy of the early 1900s is a failure in our 21st century economy.
As we have discovered to our dismay, nobody elected to Congress, or any president, has actually read any tax act prior to voting on it. And certainly not afterwards.
Can you name one Supreme Court justice — or for that matter — any federal court (called Article 3 courts) judge who has a tax background?
Is there anybody in our body politic of leadership that does their own tax return?
Neither the Secretary of the Treasury, nor the Commissioner of the Internal Revenue Service does their own tax return.
As I have observed many times over the years, the current income tax system is not administratable by the government and is not compliable by the tax payers.
It is a failure.
So what is the solution?
That is, of all those candidates running to be elected in 2012, who of them has proposed a solution which is actually directed to solving this problem of an old and bastardized tax system which just doesn't work..
Specifically, since the current system is hurting the taxpayers and the government, then what would be a better tax system?
Let us first agree on what a new tax system should look like so we can recognize it when we see it.
A new tax system would need to focus on achieving two purposes. To efficiently raise revenue to fund the proper expenses of the government, with the least burden on the taxpayers.
Any sort of social policy, or support, or subsidies, or tax credits to achieve vote getting purposes, or campaign payoffs, or using tax policy to choose winners and losers , and all the rest of those type of tax provisions takes us away from our goal and not towards it.
These non-tax objectives should be dealt with separate specific legislation and not stealthily buried in a tax law.
A tax system should be fair. Progressive tax rates are on their face unfair and regressive to the economy.
Has any successful government in history implemented a tax system so it can primarily benefit the poor who are non-taxpayers?
The economy of United States was not built on the government using tax law, and the terror of being thrown in jail, to redistribute money from the productive taxpaying sector to the unproductive but voting masses.
The Constitution requires equality. Socialist and Marxist believe in fair share along the lines of George Orwell's book Animal Farm.
A safety net for the unfortunate is important in our compassionate society but not by way of gumming up the tax law.
Similarly, complex issues involving health insurance or retirement promises must be dealt with by separate legislation.
That would enable greater governmental transparency.
Transparency in government is the key for government to gain credibility and demonstrate that neither Congress nor the president are crooks.
A tax system needs to be understood and accepted by the taxpayers as well as simple for the government to administer.
And the taxpayers should not be in dread of their own tax system.
To achieve this, a tax system has to be voluntary in fact and not by way of myth. The tax law is, in the final analysis, enforceable because the government has the right to use, if necessary, violence to enforce it.
How can the public, that is the taxpayers, get out of the horrific position?
Obviously, a different kind of tax system is required.
So, which of the presidential candidates for 2012, including the current president, has proposed a new tax system that is a solution to the problem rather than just continuing the problem or making it worse?
The president has proposed keeping the failed system with even more onerous provisions to support the redistribution of wealth.
His goal seems to be to turn the tax law into, to be both blunt and make my point dramatically, some sort of a manifesto to achieve a new world global order ruled over by the elites.
This is accomplished, in part, by the expedient of using the tax law to collapse the economy of the United States.
The president's scheme must be fought ferociously and defeated.
What about the Republican candidates?
Mitt Romney has proposed a 59 point plan which demonstrates that he is already incomprehensionable. A candidate who proposes only the buzz words of a focus group.
Does anybody even know what is Point One of the Romney plan?
Michele Bachmann doesn't do much better. She has no plan except tinkering around with the existing tax code. This is exactly what we don't need.
She is, in the end, just another self-anointed lawyer and not a problem solver.
Rick Perry, Rick Santorum, Jon Huntsman — well, they are all just politicians. Not much on their records or in their candidacy which shows any of them to be a guiding light on tax system change.
Ron Paul has a number of good ideas. He has a consistent position on tax reform for years. I've read his books and agree on many of his tax views. (and ending the Fed). Unfortunately, he hasn't been able to communicate these views very well to the voters.
Newt Gingrich is an ideas man. Every time I listen to him, I learn something. He has his arms around what American was, is, and can be. His American Solution For Winning The Future is right on, and his Jobs and Prosperity Plan takes us down the road that we need to go.
Gingrich's plan only goes to taking the United States to a flat tax of 15%. I agree that a flat tax is a step to get the United States off the express lane of tax failure.
But, clearly, keeping an income tax system, even a flat one, while politically necessary as a transitional step for the time being, is not the end all and be all.
Why? Because a flat tax is still a system based on knowing what income is. I've been an accountant as well as a lawyer for a long time, and I understand that cash flow can be precisely computed; determining income is problem.
Besides, an income tax still requires the filing of tax returns by individuals as well as businesses. Which means that we must keep the Internal Revenue Service, and all the angst that comes with that, in place.
Predictably, Congress and the administration will continue using the current tax system for all sorts of nefarious purposes that gets them campaign contributions and votes. Does anyone doubt that?
All but one of the candidates are professional politicians. As they say, they have experience in being elected..They're pros at that.
Well, how successfully has that worked out for the United States as a whole and you in particular?
Are only professional politicians qualified to lead America?
Cain has the benefit of having the real credentials of education, experience, and is a truly successful person (on his own merit) in everything he has ever done.
His background is far more impressive in every way than any presidential candidate I personally can remember. If you think there was one, then let me know.
The Herman Cain tax proposal is simple to explain. Importantly, it gets the United States to a tax system solution which is equal for the taxpayers and efficient for the government.
His tax solution, the 9-9-9 plan, demonstrates that he understands both the politics involved and the only solution that will, ultimately, work.
Simply, Phase One is a change from the horror of the existing tax system America to a flat tax system. This is what Gingrich proposed.
It's a good transitional step for the taxpayers and it will also help the IRS in being more effective in gathering revenue with little opportunity for fraud and identity theft.
Phase Two of the 9-9-9 plan is to get rid of the income tax system altogether by replacing it with a fair tax system and repealing the 16th Amendment.
It is a brilliant way to unite the flat tax proponents with the fair tax proponents.
With a consumption tax in place as the only federal tax, this eliminates the need for individual tax payers to file returns or keep years and years of receipts and records. Pay for tax preparers. Or to live in fear of our own government.
Clearly it is equal since everyone pays at the same rate even though some may spend an awful lot more.
If people are not consuming, then they are saving or investing. All of these behaviors are very good for a capitalist free market driven economy.
For the government, it is a lot easier to audit 30 million businesses on a cash basis than to audit, say, 140 million taxpayers and 30 million businesses which are primarily on an accrual or hybrid system for tax purposes.
And a consumption tax can be pretty well computer driven. Existing sales tax systems are already computerized proving that it can work almost without being noticed.
Which causes you less anguish and fear--a sales tax system or the federal income tax system?
Besides basing the tax system on cash, which the government likes to be paid in, eliminates the complex devices that are needed to convert "income" to "taxable income" and then to cash.
With a sales tax there is no need for any conversion. It's cash.
Herman Cain is the only candidate for president who has laid out a tax plan that fully resolves the existing plague of the federal income tax system problem. His solution benefits both the taxpayers and the government.
Paul and Gingrich do have the right tactic in using a flat tax to move the tax ball down the field.
Only Herman Cain has a complete tax strategy for the United States to score a goal.
More Posts by Denis Kleinfeld
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