IRS taxes: They are complicated, lopsided, inconvenient. Real tax reform is needed.

These words came as a warning to the framers of the Constitution that a government simply cannot afford to impoverish its citizens.

Indeed, the protection of citizens from a personal income tax is written into the Constitution in Article 1, Section 9, Subsection 4.

Yet, today taxes are a major burden on every working American, and they are a complicated, lopsided inconvenience in our lives and livelihoods.

We pay state sales taxes, "sin" taxes, "convenience" taxes, and a host of other taxes as part of our everyday lives.

The Personal Income Tax administrated by the Internal Revenue Service is most burdensome and overcomplicated. It is the target of the Reform Party's agenda for tax reform.

Income tax began in 1913 with President Woodrow Wilson and the adoption of the 16^th Amendment to the Constitution, which gave Congress the power to "…lay and collect taxes on incomes from whatever source derived..."

The goal in the early 20^th century was, ironically, to take more tax money from the wealthiest segment of society: wealthy individuals, corporations, and Trusts: the "robber barons" of the day.

In fact, the Income Tax began as a two-page form with two pages of instructions. The entire code was contained in just 15 pages. The top rate was 6% and less than 1% of Americans were required to submit a tax return.

Over time, however, and with much manipulation, this constitutional change has evolved into the unfair and overly complex system that hits you up for a larger and larger chuck of your money every April.

Currently, the (shrinking) middle class contributes over 80% of the more than $500 Billion the Treasury received in individual taxes. This tax burden now accounts for about 20% of the Gross National Product (the economic indicator for productivity in the United States).

Every attempt to reform income taxes and the IRS by Congress has been thwarted by lobbying of wealthy special interests and by the agendas of professional politicians.

This has caused the tax code to swell from its original 15 pages to over 18,000 pages of rules, restrictions, and loopholes. Over $30 Billion is spent each year for professional tax preparation assistance.

These additional tax codes protect special privileges for wealthy corporations and disadvantage individual taxpayers.

These laws encourage tax avoidance, directing investment away from productive use and into inefficient "tax shelters."

When people make savings and investment decisions based on tax laws, the whole economy suffers a loss: investment in new industry, new businesses, and new jobs.

This chart shows the percent of an average worker's income taken by direct taxes. These taxes include Federal, state and local income taxes, worker paid Social Security taxes, and sales taxes. (See the Taxes: From the Tax Foundation.)

The Reform Party advocates a new, modern tax system that eliminates the IRS and replace it with a system that:

1. Raises sufficient revenue for the government to perform it's assigned tasks,
2. Is as simple as possible,
3. Is efficient,
4. Collects revenues fairly from all,
5. Is paperless, and
6. Does not impair economic growth.

Two key problems with the IRS must first be addressed:

First, the IRS is unfair. By collecting taxes on incomes, the government takes most of its money from working people and only from those who earn an honest living.

The IRS requires that employers complete for W-4 and independent contractors file a form 1099 that traces their income each period. Through this process, the IRS devises how much money to take from each registered taxpayer.

This allows all those who earn their living "under the table" or in cash to avoid paying ANY tax. Those who earn their living illegally or without any paper trail for the IRS to follow share in the benefits of our taxes, but contribute nothing.

Second, the IRS system is excessively complicated. This gives a huge advantage to large corporations and the extremely wealthy, exactly the people the IRS was originally designed to track.

By hiring high priced accountants to manage financial data, and high priced lawyers to lobby for them in Congress, wealthy individuals and companies have successfully manipulated the system to their advantage. By funneling millions of dollars into the campaigns of professional politicians, these wealthy special interests have been rewarded with tens of millions of dollars in tax exemptions.

Since Congress has power over the tax code, they are free to skew the IRS away from their wealthy benefactors and on to us, the American people.

If we take away Congress’ ability to reward some individuals and disadvantage others, we also take away the ability of the rich and powerful to influence the system. Further, if we remove the hold of the IRS over employers and employees and pass it on to ALL consumers, we will spread the tax burden out more evenly, resulting in lower overall taxation for each individual worker.

Some possible options include tariffs, value added taxes, taxes on assets or financial transactions, a consumption tax on sales, or a flax tax.

A national consumption tax (sales tax) holds the most promise based on our criteria, but further study is required.

Any new system should be implemented only after it has been thoroughly analyzed, modeled, and pilot tested. Economics departments at our colleges and universities could be used to generate the data we need.

After new systems have been pilot tested, debugged, and proven successful, a new tax system should be chosen by voters in a national referendum. Also, we should require that any future change be required to pass by a 2/3 super majority in Congress.

Remember, it your money!

For more detailed information see:

Taxes: Americans for Fair Taxation Citizens for an Alternative Tax System
The Ethics Website on Tax Reform
Internal Revenue Service