Individual Tax Reform By T.S. Khanna, April 23, 2017.

 

Foundation For Better Government,

Individual Tax Reform

By T.S. Khanna, April 23, 2017

“Camel was a horse, it got redesigned by a committee.”  Similarly,  dragon was a camel; the Congress redesigned it.

In the past, many studies and promises have been made to simplify the Tax Code.  But by the time the Congress is through processing them the Tax Code becomes even more complex.  The Tax Code continues to be beyond the grasp of taxpayers.

Like any other organization, governments have an insatiable hunger to expand in size and power.  The Founders of the United States government intended it to be small, effective, and accountable.  Best way to control the size of the government and make it more effective and accountable is to limit its finances by tax reduction.

To reduce individual income taxes and simplify the Tax Code, here are some suggestions:

1.     All taxpayers may be required to register with the Internal Revenue Service (IRS) with a photograph and finger prints and obtain an ID# from the IRS.  The registration may be renewed every five years.

2.     Annual income of up to $50,000 may be tax exempt for all taxpayers.

3.     Income over $50,000 may be taxed at a flat rate of 20% federal tax and 5% state tax. 

4.     Sales tax may not exceed 5% unless voters approve a temporary increase, with a sunset clause, for a particular project in their jurisdiction.

5.     Total benefit of itemized deductions may not exceed 5%, holding minimum alternative tax at 15% for everyone without exception on income over $50,000.

6.     Employers, renters, compensation payers, and all income sources may be required to deduct 25% of the payment amount and send 20% to the IRS and 5% to the state government to be credited to the taxpayer’s account.

7.     Filing of individual  tax returns may no longer be required except for those claiming deductions.

8.     At the end of the fiscal year, IRS and state government may refund taxes paid on the first $50,000 of income.

NOTE: April 29, 2017 
     Since the posting of this article, there have been some inquiries regarding the basis for proposing 20% Federal Tax, 5% State Tax, 5% Sales Tax, and $ 50,000 Tax Exempt income.
  No calculations have been made to justify these figures but direction has been drawn from some past studies.  Learned sources inform that it is not possible to make precise projections and calculations.  Optimum percentages and the tax free income can be found only by trial.  
Here our philosophy is to free up from taxes the lower income bracket as much as possible as an ultimate goal. The final figures can be determined only by graduated trials of tax reduction, along with reduction in government expenditure.