Proposed Constitutional Amendment to Make Taxes Fair and Simple

Taxes in America have gotten out of control. Americans are getting buried alive under oppressive taxes and, as if that isn't bad enough, the convoluted tax system is sucking the life out of our economy. It's time to tame our government's insatiable appetite for the fruits of our labor.

Tax only people and only on their income!

Here is a proposal for a constitutional amendment that will allow our government to raise money through taxation but will make the taxes equally fair for every American earning income. As a side benefit, this approach will improve and strengthen our economy.

In a nutshell

• outlaw all state and local sales taxes.
• eliminate income tax on businesses.
• tax only individuals and only on their gross income. For example, tax 25% of the gross income over $40,000. The first $40,000 is tax-free for everyone.
  

No more sales taxes. No more tax on businesses. No more deductions. No more loopholes. No more calculating "net income" or amortization schedules. No more favortism for special groups like home owners and people with children. No more complicated arguments over sales taxes on internet sales because there will be no more sales taxes. No more arguments about "marriage penalty" and other tax anomalies because only individuals making income are taxed without regard to their marital status, number of children, home or farm ownership or any other unfair and unbalanced artifact found in our current tax code. In fact, all complications and unfairness simply vanish under this system because it is the ultimate in fairness and simplicity.

If you make income, you pay a percentage of your income in taxes. If you don't make any income, you don't pay any tax. What could possibly be more fair or simple? Imagine the boost our economy would receive! Businesses could focus on products and services instead of tax impact in all their decisions, we could eliminate nearly all of the $10 BILLION dollar annual budget for the IRS, no one would have motivation or excuse for cheating on their taxes and we will all hold our government more accountable for the federal budget because the increased transparency and simplicity will clearly illuminate how much each of us is paying for pork-barrel projects.

Details of Proposed Constitutional Amendment:

1. The federal government and the state governments will raise the bulk of their money through an income tax on individuals earning income.

2. The right to levy sales tax shall be reserved for the federal government. The states may levy taxes only on property and income. This will eliminate most sales taxes.
   

3. The federal government may levy sales taxes only on specific products for specific purposes closely related to the product. Sales tax revenue raised by the federal government may not be used for anything other than its intended purpose. For example, the federal government may levy sales taxes on gasoline for the purpose of building and maintaining roads.

4. The federal government and the states may levy income taxes only on individual income. The federal government and the states will be prohibited from taxing anything other than individual human beings. This means income taxes will be on real, individual, living people, not on artificial concepts such as businesses or corporations or trust funds.

5. Income taxes may be levied and calculated based only on 3 variables: (1) income tax rate, (2) base amount for normal income, (3) base amount for income resulting from death. For example, initially the income tax rate could be set at 25% and the normal base amount at $40,000 and the death tax base amount at $1,000,000. In this example, federal income tax would be defined as 25% of an individual's income over $40,000 but any income resulting from a death, such as a life insurance policy or an estate inheritance, will be taxed at 25% of the amount over $1,000,000. In this example, people making under $40,000 per year will not pay any income tax and people who inherit less than one million dollars as a result of someone dying will not pay any income tax on that inheritance.
   

6. In order to prevent favortism for certain privileged groups such as home owners, these three variables are the only variables which can be taken into consideration by the federal government or the states when calculating income taxes.

7. Congress shall decide in the case of federal income taxes and the various states shall decide for themselves exactly what constitutes income. For example, any combination of wages, interest, dividends, capital gains, inheritance and gifts could be considered as income.

8. This amendment regulates and controls the manner in which the federal government and the state governments raise the bulk of their finances from the citizens of America. It is intended to prevent the government from inventing a myriad of creative new ways to take money from its citizens. This amendment does not affect tarriffs imposed on other countries for things such as import/export duties. This amendment does not affect fees such as automobile license fees unless those fees make up a significant portion of the revenue raised from the citizens and are, in reality, an attempt to bypass the spirit of this amendment.

Quotes From Notable CPA's

Here are some quotes from some top CPA's in America on how they would fix our tax system. These quotes come from: www.webcpa.com/article.cfm?articleid=16010

"The income tax system should be essentially a flat tax on gross income, with the exception of allowable deductions for charitable donations, and state and local income tax. As the government moves away from directly helping the poor, and funding public television and the arts, a deduction for charitable donations would encourage individuals to fund the gap created by less government spending in these areas. A deduction for state and local income taxes is also essential to ease the burden for individuals living in high tax states, such as New York, Massachusetts and California.

"A flat tax system is beneficial because of its simplicity. Simplicity hopefully allows for greater compliance from individuals and corporations. But, most importantly, simplicity allows for utilizing greater resources for enforcement and collection and less for implementation and interpretation of the tax laws."

-- Melvyn Weiss, Senior Partner, Milberg Weiss Bershad & Schulman

"The tax code must not tax non-individuals, because any tax a business must pay is passed on to the final consumer of the goods or services in the form of higher prices. Business decisions to produce and deliver goods and services should not be influenced by the tax code, but by economics."

-- Carol Markman, President, National Conference of CPA Practitioners

What's Wrong With a National Sales Tax?

What's wrong with a national sales tax, consumption tax, or the disingenuously named "fair tax"? Let me count the ways:

1. People already cheat to avoid paying sales tax at just 8 percent. How much more motivated to cheat will they be when the sales tax rate is over 20 percent? Why set up a system that just begs people to cheat?

2. Without a constitutional amendment limiting the forms of taxation our government can impose on us we'll get tax creep. In other words, we'll probably end up with BOTH a national sales tax AND a national income tax.

3. Sales taxes are a burden and a drag on the economy, like an anchor around the national neck, hurting everyone.

4. A national sales tax places most of the tax burden on the low and middle income. The wealthy will be able to manipulate millions tax free in the stock market and buying and selling homes etcetera while the less wealthy shoulder the burden. Imagine a homeless person begging for money. If you give the homeless person one dollar they really only get less than 80 cents of benefit because whatever they buy, more than 20 cents will go towards sales tax. If a homeless person only gets one dollar for an entire year, is it reasonable they should lose 20% to sales tax? The only way to avoid this kind of absurd situation is to keep records and give special breaks to poor people but then we end up with a convoluted tax system like we already have. Remember, it is the deductions and the tax on businesses that make our current tax system so convoluted and unfair in the first place.

5. People, especially wealthy people, will be motivated to buy their stuff outside of America. Then we'll need to have onerous customs inspections and more tax laws to regulate the importation of personal property. Naturally, the very wealthy will always be able to get around any of these laws just like they get out of paying income taxes under our current system.

The bottom line: A national sales tax is a really BAD idea.