Tax Reform

Tax collection should be done in the most efficient, least burdensome way possible.

The United States government needs a certain amount of money to run. This site is concerned with how that money is collected. The amount collected and spent is a subject for other web sites.

If we could change the current tax system, we could save large amounts of time and effort by average citizens to complete income tax forms. We could save millions of dollars spent on tax return preparation services. We could also save millions spent by the IRS to process the income tax returns.

A good proposal is the flat tax because it greatly simplifies the reporting requirements. It is fair to lower income people because it gives them a large personal exemption. However it seems unfair that it does not tax stock dividends and interest income - income the very wealthy tend to receive the most of.

The national sales tax is a possibility because it completely eliminates the burden of filing a tax return for most Americans. Sales taxed are collected at the point of sale. The vast majority of sales are handled using computerized cash registers. How simple! Many states already have a sales tax, so there already exists a data processing infrastructure.

More Alternative Ideas:

• Replace Itemized or Standard Deductions with much larger Personal Exemptions of around $10,000.

• Replace the tax tables with a single tax rate.

• Eliminate any distinctions between married and unmarried people for tax purposes. Married people would simply be two people who are combining their income on one return.

• Have the IRS send you a bill. They already have most of the information you put on your return anyway, they get it on W-2s and 1099s. The bill could have an area to write in otherwise unreported income.

• Allow rollover of capital gains on the sale of stocks when you buy new stocks to replace them. That way you will not pay tax for capital gains that you did not use as income. This is an alternative to eliminating all capital gain taxes as in some reform proposals, that would mostly benefit the very rich.