US Federal Tax Law is too complex and inefficient because it is âcentral planningâ (social engineering) in disguise. 
Below is a suggested alternative, which fits on an index card, but there is one sheet of paper required for the definitions of various terms, like âincomeâ and âgifts,â allowed as deduction, if to IRS qualified organizations and giving some summary explanation of intent, examples, etc.
(To avoid making this post too long, that sheet will be my next post. I may discuss the transition period later.)
Surely, my tax suggestion can be improved and you are invited to do so or simply to point out the flaws in replies.
The main objectives are:
(1) To define and efficiently collect taxes.
(2) To simplify taxes. Thus eliminating most of the economic waste associated with tax lawyers and services.
(3) To lower the taxes collected from most Americans by elimination of âloop holesâ that tax lawyers exploit for the benefit of those wealthy enough to hire them.
(4) To make cheating more difficult, by requiring annual report of oneâs accumulated wealth.
(5) To eliminate all tax costs for corporations. (Corporations pay no taxes, but must distribute their unused profits to individuals who do within 8 years, or any older profits are to be gifts paid to the IRS within 6 months.)
Note: all specific numbers, such as this â6â and â8,â are only plausible suggestions made for clarity.
Congress can change them when desired and you are encouraged to suggest better alternative values now.
(6) To spread the IRS work load more uniformly during the year and eliminate the costs of making âestimated tax payments.â (Taxes and tax returns are sent to IRS by local midnight 35 or less days following your birthday annually. There are no âjoint returns.â â Everyone 18 or older files an individual tax return.)
(7) To allow simple periodic adjustments in the rate taxes are collected. (Congress can change the values of parameters in tax formula. This encourages, during times of peace at least, a âpay as you goâ budget.)
(8) To avoid the need for periodic modifications due to the effects of inflation. (All fixed dollar amount are expressed as multiples of an index. I prefer the Minimum Wage, MW, because it is well known and not subject to frequent changes or retroactive recalculation as is the âconsumer price indexâ etc. Thus, for example, the threshold below which no tax on income is collected or ânegative taxâ is paid could be 1000MW.)
(9) To partially or totally eliminate the âwelfare systemâ if the ânegative taxâ option of item (8) is used.
Note: Congress can still engage in âsocial engineering.â â Things like encouraging home ownership, marriages, well insulated houses, more efficient cars, student scholarships, etc. and the IRS can still distribute any associated funds, if that is efficient, but these economic central planning efforts should not be buried in the tax laws and forgotten as at present.
This âCentral Planningâ should be transparent and subject to periodic review by Congress.
(âSunshine lawsâ that expire automatically if not renewed or modified to serve the currently perceived purpose.)
Here is my suggestion for a simple (It fits on the two sides of a 3by5 âindex cardâ!) federal tax law:
If you are US citizen 18 or older, you owe T = 0.1(i â 1000MW - AGR) + 0.005(w â 10,000MW) but if either calculation is negative, then that term becomes zero. Here âiâ is your total income* received during the 12 months preceding your birthday month, âwâ is your accumulated wealth* at the end of that period, AGR is your âAllowed Gift Reductionâ and MW is the Minimum Wage in effect at start of the current calendar year. If this yearâs w exceeds last yearâs w by more than income, i, you must attach an explanation explaining why, which includes the Social Security number** of the donor of any gifts, greater than 100MW, received. The AGR is 50% of the gift given to IRS qualified recipients if gift was less than 1000MW; if more than that sum, the AGR is as found in the declining AGR percent table. Most people should use the convenient tax tables as they never exceed the formula calculated taxes. See the accompanying definitions sheet or contact the IRS if you have doubts about these rules or terms. Taxes are due within 35 days following your birthday (or from your estate within 1 year following your death and annually thereafter while income to, and/ or assets in, the estate require tax payments.)
*Wealth and income of persons during the 12 months preceding their 17Th birthdays is included, equally divided, in their parentâs (or principle guardianâs) âwâ and âiâ for all years in which that non-filing person is 17 or less.
**If gift is from person or corporation without any S.S. number, then 50% of the gift is added to taxes due and only 50% increases the wealth value, w; however, when an IRS ID number is assigned, that 50% will be returned.
Below is a suggested alternative, which fits on an index card, but there is one sheet of paper required for the definitions of various terms, like âincomeâ and âgifts,â allowed as deduction, if to IRS qualified organizations and giving some summary explanation of intent, examples, etc.
(To avoid making this post too long, that sheet will be my next post. I may discuss the transition period later.)
Surely, my tax suggestion can be improved and you are invited to do so or simply to point out the flaws in replies.
The main objectives are:
(1) To define and efficiently collect taxes.
(2) To simplify taxes. Thus eliminating most of the economic waste associated with tax lawyers and services.
(3) To lower the taxes collected from most Americans by elimination of âloop holesâ that tax lawyers exploit for the benefit of those wealthy enough to hire them.
(4) To make cheating more difficult, by requiring annual report of oneâs accumulated wealth.
(5) To eliminate all tax costs for corporations. (Corporations pay no taxes, but must distribute their unused profits to individuals who do within 8 years, or any older profits are to be gifts paid to the IRS within 6 months.)
Note: all specific numbers, such as this â6â and â8,â are only plausible suggestions made for clarity.
Congress can change them when desired and you are encouraged to suggest better alternative values now.
(6) To spread the IRS work load more uniformly during the year and eliminate the costs of making âestimated tax payments.â (Taxes and tax returns are sent to IRS by local midnight 35 or less days following your birthday annually. There are no âjoint returns.â â Everyone 18 or older files an individual tax return.)
(7) To allow simple periodic adjustments in the rate taxes are collected. (Congress can change the values of parameters in tax formula. This encourages, during times of peace at least, a âpay as you goâ budget.)
(8) To avoid the need for periodic modifications due to the effects of inflation. (All fixed dollar amount are expressed as multiples of an index. I prefer the Minimum Wage, MW, because it is well known and not subject to frequent changes or retroactive recalculation as is the âconsumer price indexâ etc. Thus, for example, the threshold below which no tax on income is collected or ânegative taxâ is paid could be 1000MW.)
(9) To partially or totally eliminate the âwelfare systemâ if the ânegative taxâ option of item (8) is used.
Note: Congress can still engage in âsocial engineering.â â Things like encouraging home ownership, marriages, well insulated houses, more efficient cars, student scholarships, etc. and the IRS can still distribute any associated funds, if that is efficient, but these economic central planning efforts should not be buried in the tax laws and forgotten as at present.
This âCentral Planningâ should be transparent and subject to periodic review by Congress.
(âSunshine lawsâ that expire automatically if not renewed or modified to serve the currently perceived purpose.)
Here is my suggestion for a simple (It fits on the two sides of a 3by5 âindex cardâ!) federal tax law:
If you are US citizen 18 or older, you owe T = 0.1(i â 1000MW - AGR) + 0.005(w â 10,000MW) but if either calculation is negative, then that term becomes zero. Here âiâ is your total income* received during the 12 months preceding your birthday month, âwâ is your accumulated wealth* at the end of that period, AGR is your âAllowed Gift Reductionâ and MW is the Minimum Wage in effect at start of the current calendar year. If this yearâs w exceeds last yearâs w by more than income, i, you must attach an explanation explaining why, which includes the Social Security number** of the donor of any gifts, greater than 100MW, received. The AGR is 50% of the gift given to IRS qualified recipients if gift was less than 1000MW; if more than that sum, the AGR is as found in the declining AGR percent table. Most people should use the convenient tax tables as they never exceed the formula calculated taxes. See the accompanying definitions sheet or contact the IRS if you have doubts about these rules or terms. Taxes are due within 35 days following your birthday (or from your estate within 1 year following your death and annually thereafter while income to, and/ or assets in, the estate require tax payments.)
*Wealth and income of persons during the 12 months preceding their 17Th birthdays is included, equally divided, in their parentâs (or principle guardianâs) âwâ and âiâ for all years in which that non-filing person is 17 or less.
**If gift is from person or corporation without any S.S. number, then 50% of the gift is added to taxes due and only 50% increases the wealth value, w; however, when an IRS ID number is assigned, that 50% will be returned.
