Tired Taxpayers

On 4/10/09, I blogged about recommendations for tax reform from Nina Olson, an IRS advocate. On 4/20/09, a CPA wrote a letter to the editor in which he suggested that “each senator and representative [should] prepare his or her federal income tax return personally and .. the IRS [should] audit 100% of those returns each year.”

We must have some reform. Alternatives include 1) a tax on spending, or VAT; 2) a flat tax on income; 3) a tax on savings through fees charged on all stock and bond trades.

Here is a review of flat tax proposals. Here is a proposal for an optional flat tax by Kansas senator Sam Brownback.

A fair tax is a modified VAT tax (value added tax as it is called in Europe) with no tax for those below a certain income level. The home page is here, and a page explaining the rates are here.

We all agree that the current system is broken. Where we disagree is the solution. Perhaps the best thing would be to put a version of the three alternatives and the current system on a ballot for this November and have all of us vote on it. Lawmakers have been disagreeing on reform since the last tax reform of 1986 and it is doubtful that they could ever agree on a radical change to the code.

The disadvantage of the current system is that it invites Congress to “tweak” the code to reach certain admirable goals, but this constant tweaking is confusing and treats taxpayers like we are donkeys responding to carrots dangled in front of our eyes.

Tell your Congressperson that you don’t want to treated like an ass anymore.

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