IRS to be Abolished?

Published on December 9, 2004 By foreverserenity In Current Events

Whose pulling whose leg here? According to some report there's been indication that the President might be willing to do this. If this is done, what are the implication when it comes to sales tax, property tax and everything else..especially income tax? What will happen to programs that are funded by tax dollars? I don't know. How would this affect investments, retirement savings? Food for thought I guess.

Comments

on Dec 10, 2004

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foreverserenity

on Dec 10, 2004

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Daiwa

on Dec 11, 2004

Actually, a good friend of mine has been advocating a national sales tax (VAT, whatever) in lieu of an income tax for the past 6-8 years. He happens to also have the ear of our Congressman fairly regularly and he is intrigued by the idea as well.

I would have no problem paying a 23% tax (that's the number I've heard floated) on what I spend in return for not paying 28% on everything I earn and not having the headache of doing the frickin' accounting every year, not to mention avoiding all the effort that goes into weaseling out of paying income tax. Taxing consumption (exempting food, medicine, etc., just the way we do state/local sales taxes) makes more sense to me anyway - we should remove negative incentives to hard work & success. The argument against it is that it will be a negative incentive to spending, which flies in the face of the notion of "stimulating" the economy by encouraging consumption, but If you're successful, you can afford the tax on the stuff you want. And you have more control over how much you pay in taxes (you don't want to pay the tax, you don't have to buy). There is also one other redeeming virtue that should appeal strongly to the left - the rich really would pay more in taxes, because they'd still spend their money.

While I like the idea and believe the details could be fairly worked out, and love the idea of eliminating the entire IRS bureaucracy (I know we'd get a different "collection agency" in its place, but still), I'm not holding my breath - there is so much power in the accounting industry and, frankly, too much power to be wielded by politicians in the form of tax breaks & loopholes, for the idea to really take off. At least it's hard for me to imagine it gaining enough momentum to overcome the inertia of the status quo and the entrenched interests dependent on the complexity of the tax code for their livelihood.

We can always hope, though. This next four years may be the best (only) opportunity for such a fundamental change that we're likely to see for some time. Man, a wake for the IRS would be sweet, indeed.

Cheers,
Daiwa

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