Friday, October 27, 2006
The following is a simple idea for cutting the Gordian Knot preventing congress from enacting tax reform. The Gordian knot of tax reform is that, "all proposals are seen by someone in the US as hurting them or favoring others". They are unconvinced that by slogans such as “tax neutral”.
The problem is how to take the first step. That is, "change without removing a single provision in the existing code".
As you know the purpose of taxes was to collect the funds necessary to run the federal government. This used to be simple before personal income tax and 6 feet of special provisions, most of it social engineering causing one behavior to pay more and another to pay less. The founding fathers did not envision the tax code to be used for social engineering. In fact there was no personal income tax. The American public no longer knows any better.
Solution, take a first step that will change the mindset of the American people forever. Break the tax code and forms into three sections without changing ant content. Section one has two lines. Income, Tax. Section 2 has all the current provisions that add to and subtract from what you owe, like dividends and home mortgage interest. Section three has three lines, Tax from section one, adjustments from section 2 and what you owe/tax refund. Have the IRS create the new forms and administer all three sections, just as they do now.
What will this accomplish? Two things. It separates the definition of tax collection from social engineering, establishing in the mindset of the American people that they are and always should have been separate functions.
Second it frees the collection of taxes from social engineering so that alternative tax collection methods can be proposed independent from rocking the benefits/additional requirements boat. Perception is everything. How the forms are labeled and explained are critical to the changing of the mindset of the American people. 5 years should do it, and the American people will be receptive to real tax reform.