As most regular readers of this blog know by now, I am a firm supporter of the FairTax proposal. Some of y’all have bought the book from the link in my left sidebar (thank you very much!). Below is my first participation in The FairTax Blogburst. It is a crosspost from the bklogburst producers, Terry of The Right Track Blog and Jonathan of Publius Rendezvous. See the foot of this post for ways you can be a part of this effort to raise awareness of The FairTax.
You may have noted a story recently that H&R Block, the tax preparation giant, is in trouble for, guess what? — goofing on its own taxes.
The company, which is in the middle of its make-or-break season preparing other people’s tax returns, said it had underestimated its own “state effective income tax rate” in previous quarters — meaning it owes another $32 million in back taxes.
As a result, H&R Block said it would restate previously reported earnings going all the way back to 2004.
While this story seems to revolve around state taxes, the Federal Tax Code certainly doesn’t make things any better. It is no secret that our Tax Code has gotten out of hand. As of 2003, the code comprised more than 55,000 pages of laws, regulations, and rulings. As of Tuesday, March 7, 2006, the IRS has 954 Forms and Publications available for download on its web site. This is up from 402 in 1990, and 526 in 2002. In addition to the common W-2, Form 1040-EZ, and others with which you might be familiar, some of the more interesting forms are:
- Form 709 (PDF) United States Gift (and Generation-Skipping Transfer) Tax Return
- 1200 Form W-8ECI Certificate of Foreign Person’s Claim for Exemption From Withholding on Income Effectively Connected With the Conduct of a Trade or Business in the United States
- 0998 Form 1024 Application for Recognition of Exemption Under Section 501(a) or for Determination Under Section 120
- 1205 Form 8725 Excise Tax on Greenmail
- Five forms for reporting suspicious activity of various types
- Two forms for reporting matters related to “Indians” (I suppose the IRS never went to the politically-correct term “Native Americans”)
While a tax attorney or accountant might be able to tell what these are for, I seriously doubt that anyone else can. It doesn’t get any better with the “plain-language regulations” listed on the IRS web site, either:
- Revision of Income Tax Regulations under Sections 367, 884 and 6038B dealing with Statutory Mergers or Consolidations under Section 368(a)(1)(A) (January 2006)
- Miscellaneous Changes to Collection Due Process Procedures Relating to Notice and Opportunity for Hearing upon Filing of Notice of Federal Tax Lien (September 2005)
- Revisions Regulations Relating to Withholding of Tax on Certain U.S. Source Income Paid to Foreign Persons and Revisions of Information Reporting Regulations (March 2005)
Given the sheer volume of forms and regulations, here’s the tickler: if you call the IRS to ask a tax-related question, then follow the IRS’s advice in completing your tax return and a mistake is found on that return, you, not the IRS, are responsible for the error, including any late charges, interest, and/or penalties. To paraphrase a quote from Lt. Frank Drebin of the movie “The Naked Gun” (an entirely appropriate movie when it comes to the IRS), “Like a midget at a urinal, you’d better be on your toes.”
It is the contention of those participating in this Blogburst that there is a better way, a way which is defined by simplicity, the complete transparency of all taxes collected (i.e., nothing is hidden), and one which requires no forms whatsoever on the part of the individual paying the taxes. The better was is, of course, the FairTax.
Under the FairTax, there is no need for forms used by the taxpayer. Most businesses are already completing similar forms for state and local taxes. The impact on these businesses will be minimal, merely one additional line on the state form. This means that rather than the almost 1,000 forms and documents currently needed by taxpayers and tax preparers now, one additional line on a form already in use will suffice, the form used by those remitting the collected tax to the Federal Government. All businesses serving as collection agents will receive a fee for collection, and the states will also receive a collection fee. The tax revenues from the states will then be sent to the U.S. Treasury.
Furthermore, the cost of compliance is greatly reduced. It is estimated that Americans spend at least $250 billion a year to comply with the tax code â€“ thatâ€™s $850 for every man, woman, and child in America. Billions of dollars in compliance costs are wasted each year, and we have nothing of value to show for this expenditure â€“ not one single productive service or product is added to our nationâ€™s wealth. It is estimated that the FairTax dramatically cuts such compliance costs, perhaps as much as 95 percent.
Simply put, the FairTax is easier for the government to administer and easier for the taxpayer to comply with. These facts alone demand that the FairTax receive serious consideration.
The FairTax Blogburst is jointly produced by Terry of The Right Track Blog and Jonathan of Publius Rendezvous. If you would like to join us, please e-mail Terry or Jonathan. You will be added to our mailing list and blogroll.
- Cao’s Blog
- Right Wing Nation
- Kim Priestap
- Don Surber
- Ogre’s Politics & Views
- Blue State Conservatives
- Oblogatory Anecdotes
- Euphoric Reality
- The Buzz Blog
- Slobokan’s Site O’ Schtuff
- Right Truth
- Liberally Conservative
- United Conservatives of Virginia
- Publius Rendezvous
- The Right Track
- third world county
Announcing this at roll call at Freedom Watch