Eyes of the Fleet

Eyes of the Fleet

Friday, May 17, 2013

Want a Neutral IRS? Then do away with the IRS and the Tax Code it rides on

The NYTimes takes a look at the IRS scandal in "The Real I.R.S. Scandal" and virtually ignores the First
Amendment ramifications that the IRS actions placed on free speech in favor of a view that suggests the trouble is all related the the Supreme Court's Citizens United decision.

Oh, woe, says the NYT, after strong evidence of partiality surfaces, the IRS now faces a damage control problem:
But even more regrettable is the long-term damage to the credibility of the I.R.S. as an impartial arbiter of whether organizations merit tax-exempt status. This will be difficult to undo, particularly because of the secrecy required for the agency to effectively examine organizations without generating doubts about them, as well as to prevent other organizations from coming up with strategies to evade scrutiny in the future.
Here's an idea - let's get rid of the IRS as it exists today and set up a tax system that can't be manipulated and does not rely on various special provisions designed to favor one group over another (e.g. does not favor couples with children over single, unchilded people, nor does it favor homeowners over renters, etc).

The least obtrusive tax system I have read about is the Fair Tax, which replaces all the zillions of tax code provisions and regulations and the power of the IRS with a simple sales tax:
The FairTax is a national sales tax that treats every person equally and allows American businesses to thrive, while generating the same tax revenue as the current four-million-word-plus word tax code. Under the FairTax, every person living in the United States pays a sales tax on purchases of new goods and services, excluding necessities due to the prebate. The FairTax rate after necessities is 23% and equal to the lowest current income tax bracket (15%) combined with employee payroll taxes (7.65%), both of which will be eliminated.
What about the poor, you ask - won't a sales tax have more impact on them? That is offset by the "prebate":
Under the FairTax, all Americans consume what they see as their necessities of life free of tax. While permitting no exemptions, the FairTax (HR25/S 122) provides a monthly, universal prebate to ensure that each family unit can consume tax-free up to the poverty level, with the overall effect of making the FairTax progressive in application. This is not an entitlement, but a rebate (in advance) of taxes paid – thus the term prebate. Everyone pays taxes at the cash register.
Are there potential problems with the Fair Tax? Probably, but compare them to the mess we have now . . .  not so many.

And there would be no worries about "the long-term damage to the credibility of the I.R.S."

Except for tax lawyers, certain tax accountants and IRS employees, I'm not sure who would miss the IRS and its zillions of pages of gobbledygook. Well, maybe Congressmen, who curry favor with their constituents by "fighting" the IRS on the constituents behalf to gain financial support for re-election.

Let's face it, the unfair tax system is broken and needs a restart.


  1. I like it, but it will never happen because it eliminates the elected officials ability to confer special privilege and the incentive to support them financially that comes with it.

  2. Anonymous7:18 AM

    I wonder if the IRS will add "Humans and mules doctored here" to their logo, since they're apparently running the healthcare thing, starting next year.

    Whether a fair tax or flat tax,something needs to be done, what we've got is busted.