Tags: tax | reform | Congress | problem

Congressional Tax Reform Is a Hoax

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Monday, 15 Jul 2013 08:01 AM Current | Bio | Archive

This time Congress really promises to reform the income tax code.

Sens. Max Baucus, D-Mont., and Camp, R-Mich., say they are going to start with a blank sheet of paper this time and that the other Senators should suggest which deductions allowed to taxpayers, so-called tax expenditures, can be eliminated or reduced.

This method of tax reform is obviously not starting with a blank sheet of paper. It's the same as always, with tax reform as code for Congress cutting taxpayer deductions, which then conveniently raises the amount of tax payable.

Editor's Note: Weird Trick Adds $1,000 to Your Social Security Checks

There is not going to be any tax reform. There is an election year coming up soon and Congress, particularly the Senate, needs something to tell the voting taxpayers that they are going to make things better.

Of course, the Senate is not going to make things better for the taxpayer, but the fight between the lobbyists and ideologues over who gets stuck should raise lots and lots of campaign contributions.

Why not? It's worked every time since 1913.

Congress is always claiming that they are working for the American people to make the tax system fair and just. This con job is embedded in the fabric of American politics.

There are several problems with Congress using the existing income tax system as a base and then tweaking a deduction here, a credit there, covering up additional subsidies for favored businesses and, of course, more welfare for the "I am a victim" industry.

Problem One: In the current income tax system there is no definition of income. Consequently, thousands upon thousands of pages of incomprehensible law try to define income or what is not income, but which the tax law deems it income.

Problem two: Business deductions are based on political considerations not financial. The famous Tax Reform Act on 1986, which conservatives are so proud of, had a change in the allowable depreciation deduction. That, in turn, put an enormous number of real estate projects under water, which resulted in the savings and loan industry (fueled by FDIC guarantee on $100,000 accounts) being wiped out.

Problem three: Tax credits are predominantly nothing but a cover up for bribing voters.

Problem four: A progressive tax system is not one that advances the welfare of the taxpayers. Quite the opposite. Success is taxed at higher rates creating a disincentive to maximize success, lowers savings and restricts investment.

A flat tax still has the basic problem of being based on an impenetrable tax law. This is an idea that only an economist would think works. Nothing more than lipstick on a pig.

Problem five: It's not only taxpayers who can no longer deal with the income tax law; the IRS is in the same position. Among the reasons Obamacare is being delayed is that the IRS just has no ability to administer it.

The attack on offshore accounts held by U.S. taxpayers is also being deferred since the IRS does not have the capacity to administer that burden as well.

Problem six: The scandals at the IRS show how the political corruption of Congress and the Obama administration has engulfed the tax agency. IRS management refuses to truthfully testify before Congressional oversight committees. A couple of people in upper management have taken the Fifth Amendment privilege to try and get immunity from prosecution for the work they did at the IRS.

Problem Seven: Basically, the taxpayers do not trust the IRS, the president or Congress.

Editor's Note: Weird Trick Adds $1,000 to Your Social Security Checks

Are Baucus and Camp really trying to reform the income tax system?

No. Like all the previous tax reform ruses, this one is a hoax also.

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Kleinfeld
There is not going to be any tax reform. There is an election year coming up soon and Congress, particularly the Senate, needs something to tell the voting taxpayers that they are going to make things better.
tax,reform,Congress,problem
622
2013-01-15
Monday, 15 Jul 2013 08:01 AM
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