Sunset the Internal Revenue Code

Economy
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As currently constructed the Internal Revenue Code is highly subjective, bent to special interests, difficult to enforce, and lacking in proper compliance. The IRS as a government agency constantly plays catch up in technology, training, updating of systems and personnel, with high turnover and marginal performance in a unionized workplace that wastes vast resources on diversity projects and political churning of little to no use to the taxpayers they claim to serve as a priority. The National Treasury Employees Union (NTEU) typically gives 95 percent of their partisan contributions to democrats and liberal issues.

To reduce this waste and unnecessary overhead, and to unleash American productivity to lift all economic boats, we need a revenue stream that’s easy to explain, easy to use, easy to update, and easy to enforce. Compliance is improved when systems are secure, transparent, and efficient.

There are two options of merit, in the sunsetting of the current onerous system: A basic Flat Tax replacing most other federal revenue schemes now in use, or a similar National Sales Tax. Either is an improvement on the existing regime, to reduce operational overhead, confusing guidelines, and expenses by Washington that are too often make-work for the sake of entrenched parties of no particular help to American prosperity outside the Beltway.

My personal preference is for a National Sales Tax, with shared revenues to states that may then reduce their own tax hierarchies, passing savings of scale on to their taxpayers. The NST would by most estimates reduce IRS staffing requirements by 50 percent, simplify audits to the businesses collecting and submitting tax proceeds (most at retail already do), flatten compliance regulations, and free the majority of 1040 filers from ever having again to file another form with the IRS. That’s removing quarterly and annual filing chores that presently delay productivity, while feeding a bureaucracy that has outlived most of the usefulness once reserved for going after bootleggers! We can and must do better.

Exceptions can be made for the truly needy on some purchases, and some wholesale transactions early in the manufacturing pipeline, but a goal of near universal compliance is achievable. If airlines and concert ticket sellers can handle millions of complicated transactions a day Washington can handle similar audits, of shipments to inventory to sales, at the compacted level of scrutiny needed for compliance.

I welcome comments, suggestions, and feedback on this important initiative.

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The problem with a flat tax is:
You still need the IRS to calculate and enforce income reporting.

How about this idea instead:

  1. Abolish the IRS
  2. The only entities that pay income tax, becomes the STATES. The States collect revenues from a wide variety of sources. Require every State to pay 15% of their GROSS REVENUE to the Federal government. Because the states keep detailed records they are easy to track. This was blocked by a judicial decision 100 years ago. Revisit that and change the law if necessary.
  3. The dollar’s ‘2% inflation target’ becomes an official revenue stream. Increase the money supply by 1% a year officially declaring that to be the property of the Federal government.
  4. Any taxes on tariffs etc

In this fashion, no American needs to report their income to the IRS, ever again.

2 Likes
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The states are as bad or worse when it comes to excessive bureaucracies and undue burdens for various and changing compliance. Less is more.

I’d collect the National Sales Tax and pass along a portion to each state.

States themselves need to reduce the compliance burden, by consolidation of revenue systems and streams. Property, sales, income, estate, corporate – way too much hassle and way too inefficient.

4

The thing is, the States have many ways of generating revenue. That model I describe could be extended to any taxing jurisdiction, including cities, towns etc – any official jurisdiction below the federal government would be required to give 15% of its gross revenues to the Federal Government.

In return for their ability to extract revenue from the American people, they should give a cut to the Federal government.

Because they would all give 15% of their revenues, the government would have over 50*15/100 or over 7.5 times as much revenue as the average state, not including the revenue collected from cities etc.

This would also provide an economic disincentive to local and state taxation and ‘other’ means of revenue generation, such as unrealistic licensing fees and schemes. Which they currently do.

That would of course include a percentage of any revenues they receive from property taxes, local sales taxes, etc etc

If you add up all the sources of revenue I describe it does not equal the amount gathered from income taxes – but then, you no longer need to pay for the IRS, and there is no reason for most of the government’s expenses, anyway.

In 2023 - total State and property taxes – $513 billion
Tax revenue on 15% of that: $77 billion
‘Inflation’ 1% tax on 2023’s m2 Money supply of $21 Trillion: $210 billion
Tariffs and other miscellanious: $200 billion
2% national sales tax: $100 billion

Total revenue: $587 billion. Without the IRS existing.

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Whether federal, state, local anything that reduces bureaucratic overhead while easing compliance hurdles is essential to removing obstacles to productivity. Many states have started to reduce or eliminate various tax regimes, typically no state sales or income taxes, Texas and Delaware a couple examples. They make up for it elsewhere.

Reduced spending under balanced budgets helps too, but in any improvement a flattened government presence has to be part of true streamlining.

Much work to be done.