With the growing scandals now surrounding the IRS, even many tax and spend politicians are now jumping on the bandwagon to call for abolishing the IRS and our current income tax system. But in order to protect their gravy train, the tax and spend crowd then proposes replacing our current system with a flat tax or more correctly stated, a flat income tax.
So let’s look at the reality of what they propose.
They begin by talking about how out-of-control the IRS has become and then tell us that we need to abolish the current income tax system and abolish the IRS, by replacing the current progressive income tax with a “flat tax”. It sounds good, doesn’t it?
However, that proposal is very deceiving. A flat income tax is nothing more than a red herring. It’s a way to make it appear that they are fighting for us, while they are really fighting to protect the current system.
In fact, there is no way to tax income – flat or progressive – without an agency like the IRS, to insure that taxpayers are reporting all of their income. Think about it. Without an IRS, everyone from waiters to used car salesmen to billionaires will under-report their income, just as many do today. So while the flat-taxers say that they want to eliminate the IRS, their proposal actually requires maintaining the IRS. Oh, they may change the name of the agency, in order to keep up appearances. But count on it. That agency, whatever its name, will be just as obtrusive, obnoxious and plagued with scandal as the current IRS.
So this raises the question, “How do we eliminate the IRS?” Won’t every other tax reform system require such an agency?
The truth is that all but one of the tax reform proposals currently being discussed will require an IRS or equivalent agency. The FairTax, being a tax on new retail products and having no income tax component is the only tax reform proposal that completely abolishes the IRS, without creating a new equivalent agency.
You see, under the FairTax, retail businesses collect the tax, just as they currently do state sales taxes in 45 states. They remit the collected taxes to their state tax collection agency that is the only agency that might audit those businesses. The states then remit the federal government’s portion of those taxes to the U.S. government. The U.S. government will certainly have auditors. But unlike flat tax auditors, FairTax auditors will only audit the state tax collection agencies, to insure that the states are remitting the right amount to the federal government.
Under the FairTax, the feds audit only the states, the state tax collection agencies audit only retail businesses and no government agency audits individuals. It is therefore, the only tax reform proposal that completely abolishes the IRS.
Don’t be fooled by the flat tax crowd. They are just the tax and spend crowd in drag. A flat income tax is nothing more than a ploy to keep the current system in place. Furthermore, history shows us that a flat income tax won’t remain flat much past the next election.
If you want tax reform that completely gets the government out of your personal finances, then the FairTax is your only choice.