Welcome to TaxView with Chris Moss CPA Tax Attorney
Remember the cash for clunkers program Congress created in 2009 for your old beat up car. You brought in your clunker car to the dealer and got cash to buy a new car to stimulate the economy? Well in 2016 the 100 year old income tax has become the new clunkers program, an obsolete and inelastic “clunker tax” that is not working. The income tax needs to be replaced with a new tax better suited for the 21srt century, a National Sales Tax. So if you want to see how a National Sales Tax could help you save taxes stay tuned to TaxView with Chris Moss CPA Tax Attorney to find out why a National Sales Tax is good for you and good for America.
Historically income tax has always been somewhat of a voluntary tax. History shows most Americans when given the choice, choose not to pay the income tax. That is why in 1943 with the introduction of the W2 form in just two years revenue collection increased from $7 billion to $43 billion with 60 million Americans added to the tax rolls almost overnight.
Congress realized the power of the W2 with revenue collections as a percent of Gross Domestic Product surging from less than 6% to almost 20%. Unfortunately Americans would fight back against the W2 form. Slowly an underground economy thwarted forced W2 withholding now estimated to total almost $2 Trillion a year in unreported income. Congress fought back as well
Over the last 30 years there has been an attempt by the Government to “capture” all that underground income by creating the 1099 network of reporting hoping for another W2-like increase in collections as percentage of GDP. The ultimate 1099 program was enacted in 2010 when Congress tried to capture all income from everyone, but Congress soon realized this was impossible to enforce let alone comply with. That law was repealed a year later in 2011.
The fact is that it is impossible in the 21st century to capture all income from 1099s unless the IRS audits everyone. The solution? An involuntary national sales tax, taxed at the source of each purchase at the same time state sales tax is collected. Easy, simple and very effective., and most importantly involuntary. But just in case you’re not convinced yet that a voluntary income tax does not work in the 21st century, there’s more: Identify theft, a 21st century crime is further eroding income tax collections.
The Government is losing at least $6 billion a year to identity theft as organized crime has moved its operations from drug dealing to identity theft. John Koskinen, the former Commissioner of the IRS had recently commented that he had heard from Florida police that “street crime is down, and drug deals have been replaced, because these former drug dealers are now filing false IRS returns”.
Add identity theft to the underground economy and the IRS is losing so much money the Government is simply unable to collect enough money each year to allow America to pay its bills. Further add additional tax revenue being lost to off shore illegal tax shelters and you have the triple crown of tax evasion: Underground economy, identify theft, and offshore tax shelters. No wonder our National Debt is $19.8 Trillion dramatically approaching the unthinkable $20 Trillion level.
Furthermore, the IRS in the 21st century does not have the manpower to find, the perpetrators, prosecute the criminals and throw in jail the felons living underground, filing false returns and moving funds illegally offshore.. A national sales tax would no need an entire army of enforcement auditors and investigators to administer as such a tax would piggy back off state and local sales tax already in place and already under control.
As an added benefit of enacting a National Sales Tax, all off shore money would soon return home and many if not all tax shelters would disappear back to the 20th century where they belong. With our new President leading the way, if Congress were bold enough to embark on a 21st century solution to increase revenue collection, perhaps annual deficits would be wiped out as well. Could the dramatic rise in collections as a percent of GDP from 1943 be recreated in 2015 with a National Sales Tax?
I don’t know about you all, but I don’t want to see our Government IN 2017 cut services to Americans, including our military, just because Congress does not have the courage to see that the income tax has become a “clunker tax” income tax has become inelastic and outdated and simple Economics of Tax theory requires and demands an elastic tax for the 21st century.. If you all believe that the income tax is now an obsolete clunker, let your elected representatives know how you feel. Perhaps House Ways and Means and Senate Finance can best serve America by creating a national sales tax, a new tax, better suited for the 21st century rather than trying to reform a 100 year old clunker.
Thank you for joining us on TaxView with Chris Moss CPA Tax Attorney.
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Chris Moss CPA