Steve Muehler's Plan to Eliminate Personal and Business Income Taxes
Updated: Apr 23
If you follow politics enough, you will surely know that "Americans desperately want a fairer tax system and relief from arbitrary treatment by the IRS". True reform requires simply junking the personal and corporate incomes in favor of a consumption tax.
The House Ways and Means Committee Chairman Dave Camp estimates tax filing, recordkeeping and the like amount to $168 BILLION DOLLARS a year — a terrible waste exceeding 10 percent of the taxes collected. Much of the personal information revealed is a terrible invasion of privacy, and the constant fear the IRS will audit taxpayers for their political activities is outright tyranny.
The United States Tax Code is riddled with special interest provisions that favor rich donors to political campaigns, distort business decisions and consumer choices, and handicap economic growth and job creation.
In 2016, the Treasury collected $1.55 trillion from corporate and personal income taxes. Under my Administration, we would replace this with a 12 percent sales tax on all private purchases and other payments — be they computer equipment, college tuition or lunch at the corner takeout.
Businesses and institutions would then pay to the Treasury the taxes they collected less sales taxes paid on purchases of materials and equipment, rent and the like. This subtraction would avoid the double taxation of materials and equipment businesses purchase and create a value-added tax often proposed by advocates of reform.
It would end forever all the headaches associated with valuing inventories, calculating depreciation on capital equipment and other work that cost billions in accounting and legal fees.
A VAT would favor no activity over another, and by taxing goods and services at the point of sale, it would end the problem of U.S. firms parking profits abroad to avoid taxes.
Businesses and institutions would file a three-line return: 1) how much tax they collected, 2) how much they paid and 3) the difference. Individuals would file no tax return at all!
Temptations would abound to exclude or exempt all kinds of activities, but that is the kind of thinking that gave us the current mess — and inequities, slow growth and exceedingly complex tax returns.
Two problems will remain. A VAT is not progressive — it taxes rich and poor consumers at the same rate. The elderly, who more or less live on savings, have already paid income taxes on those savings and would be taxed again.
Under my Administration, we would impose a simple solution which would be to raise the rate to 15 percent and award each parent $4,000 for each child and pay similar amounts to each American over 65.
If Congress wants to spend more, it could raise the rate further. That would make transparent to all the cost of spending more on government activities. If conservatives on Capitol Hill want to cut programs, they could explain to voters how much those savings would lower the rate.
Elegant, egalitarian and efficient, such a value-added tax without exemptions would give Americans the tax reforms they want but privileged, rich folks and big businesses spend a fortune avoiding.
This Tax Reform Plan would also equate to a massive reduction in the size and operational costs of the IRS.
The economy would grow faster and create more jobs, and Americans would live better and in less fear. And that is what America is supposed to be about.
A future Blog Post about "Internet Sales Tax" and a "Consumer Import Sales Tax" will also go further to detail my tax plan.
Steve Muehler is the Founder & Managing Member of the Private Placement Markets:
Private Placement Markets: www.PPMSecurities.com
Private Placement Debt Markets: www.PPMDebt.com
Private Placement Equity Markets: www.PPMEquity.com
Private Placement Markets – Real Estate Loans: www.PPMLoans.com
Equity Lock Residential: www.EquityLockResidential.com
Equity Lock Commercial: www.EquityLockCommercial.com
About Mr. Steve Muehler, Founder & Senior Managing Member:
Personal Site: http://www.SteveMuehler.com
Personal Site: www.StevenMuehler.com