What's your idea for tax reform?

A flat tax, and the legislation must explicitly prohibit adding loopholes or special provisions. Imagine filing your taxes on a post card.

Oh, and also your realistic idea for tax reform?

There isn't one. Simplifying the tax code would limit corruption in Congress. Congress lives off of corruption, so it ain't gonna happen.

Point missed: if you follow the instructions of IRS agents specifically, and your return is still wrong, it's still your fault.

...if you follow the instructions of IRS agents specifically, and your return is still wrong, it's still your fault.

Of course. And if you disagree and try to argue, the IRS will just empty your bank accounts. No due process required, just approval by a low-level bureaucrat, and you will be penniless.

If, despite this lack of money, you manage to hire a tax lawyer to fight for you, you can go to court. Of course, the only court you can go do is the one that is run by the IRS itself. So, good luck with that.

And note our de facto debtors' prisons:

http://www.npr.org/2015/10/21/450546542/lawsuits-target-debtors-prisons-across-the-country

She owed $1,000 on unpaid fines and fees from an earlier traffic stop, two years prior, when she was caught driving without a license or insurance. She says she wanted to pay but didn't have the money. Kennedy, a 36-year-old single mother of two, works sporadically whenever she can find cleaning jobs.

She had a part-time job at a motel but lost it when she missed work while in jail. After her release, she got occasional calls to clean the ballpark after Biloxi Shuckers games, but now the baseball season is over.

She still has outstanding court fines and worries that the city will issue another arrest warrant.

"It's scary," she says. "You have to sit there and worry, wondering over your shoulder if you're going to get picked up this day, if you're going to get picked up that day. It's a really upsetting feeling. If I can get the money, I will pay for it. But I can't give nothing that I don't have."

A flat tax, but on consumption instead of income. The Fairtax was a great idea. No income tax returns to file - all of the taxes you pay collected at the register, regardless of whether you pay by cash or credit, and remitted by the vendor just like they remit their local sales taxes.

It seems odd that entire industries would be required to help people just to pay their taxes.

The problem seems to be partly that taxes are used to attempt to manipulate society, which I kind of suppose is what the Feds are supposed to do, and partly that the laws keep getting rewritten to reward this weeks friends, which is not supposed to happen, but seems to be normal. After that the law sits there on the books and there is a sort of a gold rush of people contorting their situation so they can fit through the various loopholes too.

I would also favor something that resulted in massive simplicity, but I'm afraid that I don't have anything that meets our beloved Goddesses' "realistic" requirement.

I side with random with a tweak. A 15-20% sales tax, no income tax or other 'fees'. You get the same revenue and vastly reduce the cost of getting it.

And as random says, it will never happen (or at least not any time soon) because of corruption. With a flat sales tax you could fire ~80% of the IRS bureaucrats. All the tax specialists would be out of business (but not accountants in general). Also giving carve outs to special interest groups would be difficult.

It would also be nice if the government followed GAAP instead of the 'magic hand waving' system of accounting.

"The problem seems to be partly that taxes are used to attempt to manipulate society, which I kind of suppose is what the Feds are supposed to do"

No Kenmce. Just no. If you want to provide welfare then pay it out as a line item on the budget. Doing so through the tax code is horribly inefficient and unpredictable. (401K ring a bell. Completely unintentional.)

Flat tax, FairTax, "national sales tax" all noble ideas, some more appealing than others (I'd prefer a flat tax, no deductions. I'd settle for maybe 3 brackets based on income of 5, 15, 15%).

The problem is taxes are like herpes. Once in place, impossible to get rid of. All the alternatives mandate getting rid of current tax schemes which "ain't gonna happen".

"She owed $1,000 on unpaid fines and fees from an earlier traffic stop, two years prior, when she was caught driving without a license or insurance. "

Y'know, in a better world, the city could find some work for her to do to work off the fine. Sweep floors and empty trash cans in City Hall, or something. But that would step on the union's toes, and what's more important -- citizens or the union? We all know the answer to that.

The problem seems to be partly that taxes are used to attempt to manipulate society, which I kind of suppose is what the Feds are supposed to do

Really?

Can you point me to the section of the Constitution, or one of the Amendments that specifically authorize this power to manipulate?

Getting back to taxes, I would advise you to avoid strong drink. For it may cause you to shoot at tax collectors and miss.

H/T Heinlein

Oh, and regarding the title of this entry, if I ran my business the way the federal government does, I'd be in jail for fraud and many other charges.

We really need an amendment that makes it illegal for Congress to engage in insider trading, and from exempting themselves and favored classes from certain laws.

"Can you point me to the section of the Constitution, or one of the Amendments that specifically authorize this power to manipulate?"

His assumption is very common today, though. We are widely taught by our supposed betters that the government has all powers not explicitly prohibited by the Constitution, and that we have only the rights explicitly granted in the Constitution. (And even those can be worked around or suspended as the government sees fit, because sexism and racism and terrorism.) That is clearly the exact opposite of what the Constitution says, but I'd say it is a view held by a majority of citizens and most people in government. The Tenth Amendment? Never heard of it.

Or the Ninth, for that matter...

And yet, if you OWE them money. . . THAT line, they'll answer, and answer (relatively) quickly.

It only took ~20 minutes on hold. . .

You are ALL missing the point... IRS Tax Code is purposefully complex, thanks to both the IRS and congress. They seek to keep it this way to ensure their jobs are perpetuated ad infinitum. Our government no longer serves the people, it serves itself, continually creating victims, crimes, laws, divisions, issues and more things each of our existing divisions needs to monitor so that they cannot be abandoned. Many of our existing branches of government can no longer even REMEMBER their original charters, let alone hope to serve the people in any way... Look at the EPA, the IRS, the FDA, the Bureau of Land Management, FEMA and a host of others - they are now so bloated without oversight. If we COULD file our taxes on a postcard, the entire IRS could be 50 people and a giant computer. 30k IRS employee immediately laid off... Imagine the budget line item gone that could be spent elsewhere????

She owed $1,000 on unpaid fines and fees from an earlier traffic stop, two years prior, when she was caught driving without a license or insurance.

I'm a bit surprised by the people who don't think the Feds are busy steering, or trying to steer, the country. Every time they pass a law, publish some code, allocate funds, they're trying to makes us do or not do something else. Like it or not, they create the playing field, set the rules, serve as referees.

What else do you think they do all day?

I'm a bit surprised by the people who don't think the Feds are busy steering, or trying to steer, the country.

Well, I sure hope they're paying attention to the road when steering along here.

It should be a VAT, rather than a sales tax. VAT is collected incrementally all along the value chain, thus minimizing the incentives for fraud that are inherent in a sales tax, which is levied all in one go.

No Other Rob. Vat taxes shred economies. They look like a good idea. But what they actually do is minimize the appearance of taxation and make that taxation more prone to corruption. Currently the US federal government takes in 18% of GDP. No matter how they've structured the tax code they haven't been able to increase or even decrease that percentage. (They do move around who pays it.) With a VAT you can easily hit 40%, 60%, and higher.

If the US imposed a VAT you would not only destroy the US economy but also all the export based ones dependent on the US. While China may not seem like much of a loss Europe and Japan would be forced into permanent recession and probably revolution.

It may seem like I'm exaggerating but I'm not. A US VAT tax could easily lead to WW3.

You're overstating you case a little there, Ben.

To the extent that your beef is with the practice of hiding the VAT in the overall sale price, you may have a point but there's no reason that we would have to do it that way.

With VAT itemized, it looks just like a sales tax to the consumer. The only difference is that the merchant has already remitted part of that tax, by paying it to their supplier. Thus, they only have to remit the difference directly to the government, reducing the incentive for fraud.

Unlike most of us here, I have experience with VAT, from when I owned a business in England. Now, VAT in conjunction with income taxes has the potential to destroy economies, but that's just a matter of the overall tax burden, not a function of VAT per se.

"She owed $1,000 on unpaid fines and fees from an earlier traffic stop, two years prior, when she was caught driving without a license or insurance."

I'll preface what I'm about to say by admitting that there may be a backstory here, and there's more to it than this sentence captures. But in what world is $1000 a just fine for an ordinary traffic ticket? Traffic and parking violations are supposed to be civil offenses. The purpose of the fine is really to just be a token, to remind you not to do it again. I can remember when parking tickets were $5, driving without your license on you was $10, and ordinary speeding was $30.

But now the purpose is not to discourage the un-civil behavior, but to raise revenue. They want you to do it again, so they can collect more money from you. There was a town in south Florida whose city limits consisted of a few acres surrounding a major intersection of two state highways. The town's sole source of revenue was traffic tickets; they set up daily at the intersection and gave out tickets for speeding, red light "running" (meaning you went through on the yellow rather than slamming on your brakes), and "illegal turns" -- right on red was prohibited within the city limits, but there was no sign saying this; you had to know. The "mayor" and his relatives, which lived in a trailer that doubled as City Hall and the courthouse, lived handsomely off of the revenue. Until the Florida state legislature had finally had enough, and they passed a bill revoking the city's charter.

You are incredibly naive Rob. Given the choice of hiding the tax or being upfront about it which do you expect our politicians to chose? And adding the income tax makes no difference.

The biggest issue with the VAT is it's ability to be hidden. People react fairly quickly to changes in income and sales taxes. In the US this has lead to Hauser's Law. When government raises taxes people in the US either change what they are doing to avoid the tax or they do less of it. This effectively locks federal receipts to 15-20% of GDP. Want more income, increase GDP. You aren't getting any more taxes otherwise.

But once you add a VAT the rules change. Hauser's law does not apply in Europe. European governments regularly take in much more than 20%. Even much more than 30%, which is the US average total tax burden. This high tax rate has a consequence. 3% annual GDP growth in considered high in Europe. In the US that was considered a recession. Obama has amply demonstrated as the US moves towards a European system of regulation and taxation we get a European style of economic growth. He also demonstrated the link between Europe and the US. As US growth dropped by half so did Europe's. Currently the US, Europe, China, Japan and others are in currency wars trying to devalue their money in the hope their exports will increase. All to no effect.

The Eurozone currently has an annual GDP growth rate of ~1%. What do you think will happen if that drops any further or even stays steady for a decade? Even with a population growth rate of 0.5% you are still looking at war or revolution.

Nonsense, Ben. In the context of a President and Congress who are willing to abolish the IRS, slash spending and move to a national consumption tax, them not hiding it is perfectly plausible.

Give it eight years. How about then?

It may seem like I'm exaggerating but I'm not. A US VAT tax could easily lead to WW3.

Well, that's probably the most provocative comment I've read so far in 2016.

I aim to please JD.

Essentially the argument is that too much of the world is dependent on the US economy. So if you smash the US economy we return to the days of pre-US hegemony. We already have Russia and China gobbling up their neighbors. How many more nations playing at conquest do you need before WW3 kicks off?

I also don't think the people most likely to impose a VAT would repeal the income tax. The Republican and fiscal conservatives would like a consumption (i.e. sales tax) but react very negatively to a VAT. Tax and spend Democrats look very favorably at the VAT. In part because they want the revenue and in part due to a love of all things European.