Up | Fairness | Efficient | Behaviorally Neutral

The importance of this aspect of The American Income Tax Simplification Plan can not be underestimated. From the government’s perspective, it might be the most important. The goal is to raise the required funds with the least negative impact on the economy as possible. The current system has a tremendous overhead or compliance cost associated with it. As I have mentioned, I have seen estimates that corporate compliance costs might run as high as 100%. Tax compliance costs Microsoft millions each year. This is money that neither helps the company, employees, the stockholders or the government. While the tax attorneys, accountants and CPA firms might disagree, it is as cost that should go away.  

There is also an impact on individuals. Tax returns for the millions that actual pay the bulk of the Federal Income Tax are complicated. Billions are spent on tax preparation that again is a lost cost that benefits no one. 

There are other tremendous costs passed on by the current tax code. The inheritance tax is an easy target. Supporters claim it only affects the very wealthy and most, with good tax planning, aren’t affected. Most of the very wealth spend huge sums of money on tax planning and are able to avoid the impact of the inheritance tax. Again, this is money that neither benefits the economy nor the government. Small businesses and farms are particularly hard hit. Again supporters claim very few are actual hurt but they ignore the tremendous cost and turmoil created behind the screens and what must be done to survive that tax. These costs are real and non-productive.  

We can not discuss Efficiency without including the IRS. Any tax system must have an enforcement arm. The hope is that the system doesn’t need much enforcement! This system would retain the IRS unlike the national sales tax alternative. I would like to offer this support for the IRS: It has been a government agency tasked with the impossible. It has been asked to enforce tax laws no one understood and no one felt was particularly fair. There have been abuses by individuals within the IRS but given the agency’s task, I am more amazed that it has done as good a job as it has.  

Within The American Income Tax Simplification Plan, the IRS will play an important enforcement role while engaging equal foes. Given the fact that the individual rates will the low and will still be withheld from paychecks, I see a greatly reduced IRS involvement with individuals. The IRS would be tasked with the enforcement of the more complex corporate/business taxes along with the collection of the sales tax. I believe that this will be the areas where abuses will be more likely. The positive aspect will be that the IRS will be dealing with companies equipped to handle such inquiries and their interaction with individual tax payers will be greatly curtailed.  

The American Income Tax Simplification Plan:

• Greatly reduce compliance costs thereby growing the economy
• Greatly reduce tax planning costs for individuals along with preparation fees
• Reduce compliance issues for companies and corporations in both the areas of sales tax and revenue tax collection.
• Reduce the role of the IRS to the enforcement of companies and corporate tax compliance.