Restructuring our Tax System

By Edward M. Gonzalez

Edward Gonzalez advocates the replacement of all federal income and payroll based taxes with a single national sales tax.

Goal: A simple tax system that allows all individuals to see on a regular basis exactly how much government is costing.

Solution: There are a number of different ways to accomplish this open and honest tax system. There are many arguments for and against the income tax, the sales tax, property tax, corporate tax, capital gains tax, excise taxes, etc. One simple and open system is a flat income tax. The only tax levied against any individual would be a single percentage of their total production. In this manner, every individual knows exactly how much is supporting government.

There is another argument that instead of taxing production in the form of an income tax government should tax consumption in the form of a single sales tax. Instead of having pay checks taxed, all individuals would pay a single sales tax whenever they buy an item at the retail level. A single national sales tax would also be an honest form of taxation in which all individuals would see and understand exactly how much money is required to support the government.

Although any single source, single percentage tax system would be an honest form of taxation, I believe a single national sales tax is the best choice, for it not only provides an honest and simple tax system, it also aids in other problems we have in the United States, as I will discuss in some of the following steps. For more information on this type of consumption tax read, The FairTax Book, by Neal Boortz and Congressmen John Linder, or go to http://www.fairtax.org.

The adoption of a single national sales tax would involve abolishing all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes. Although I cannot predict with exact certainty what that national sales tax rate would be; the United States Government spending was 40% of the country's gross domestic product in 2009. A 40% national sales tax, in addition to the local and State taxes, paid every time an individual goes to the store may scare and infuriate many people, but the point is that we are all currently paying this tax in hidden forms. This simply brings the cost of our government into the open.

There would be no exceptions to this tax. All individuals in all industries pay the same tax. When one seemingly good exception is made, it leads to more exceptions and then we have billions of dollars a year spent on accountants and lobbyists attempting to seek loopholes or special favors for their clients. Any well meaning exemptions also lead to complications in the tax code. The Tax Foundation released a report that in 2005 Americans spent 6.6 billion hours and $265 billion just to comply with the federal tax code. That is in addition to the taxes Americans are actually paying to the government.

"The accounts of the United States ought to be and may be made as simple as those of a common farmer and capable of being understood by common farmers." -Thomas Jefferson to James Madison

The fundamental principle of any honest tax system is that all individuals fully understand how much they are being taxed. With a single source tax system, when a politician implemented new and "necessary" public programs, individuals would immediately see their taxes rise and act accordingly. This honest form of taxation would allow individuals to see exactly, with no guesswork, what portion of their resources is supporting government.