Liberally Conservative

"Freedom is never more than one generation away from extinction. We didn't pass it to our children in the bloodstream. It must be fought for, protected, and handed on for them to do the same, or one day we will spend our sunset years telling our children and our children's children what it was once like in the United States where men were free....... ~Ronald Reagan~

Wednesday, March 08, 2006

FairTax Blogburst

You may have noted a story recently that H&R Block, the tax preparation giant, is in trouble for, guess what? — goofing on its own taxes.
The company, which is in the middle of its make-or-break season preparing other people’s tax returns, said it had underestimated its own “state effective income tax rate” in previous quarters — meaning it owes another $32 million in back taxes. xxxxxxx
As a result, H&R Block said it would restate previously reported earnings going all the way back to 2004.
While this story seems to revolve around state taxes, the Federal Tax Code certainly doesn’t make things any better. It is no secret that our Tax Code has gotten out of hand. As of 2003, the code comprised more than 55,000 pages of laws, regulations, and rulings. As of Tuesday, March 7, 2006, the IRS has 954 Forms and Publications available for download on its web site. This is up from 402 in 1990, and 526 in 2002. In addition to the common W-2, Form 1040-EZ, and others with which you might be familiar, some of the more interesting forms are:

While a tax attorney or accountant might be able to tell what these are for, I seriously doubt that anyone else can. It doesn’t get any better with the “plain-language regulations” listed on the IRS web site, either:

  • Revision of Income Tax Regulations under Sections 367, 884 and 6038B dealing with Statutory Mergers or Consolidations under Section 368(a)(1)(A) (January 2006)
  • Miscellaneous Changes to Collection Due Process Procedures Relating to Notice and Opportunity for Hearing upon Filing of Notice of Federal Tax Lien (September 2005)
  • Revisions Regulations Relating to Withholding of Tax on Certain U.S. Source Income Paid to Foreign Persons and Revisions of Information Reporting Regulations (March 2005)

Given the sheer volume of forms and regulations, here’s the tickler: if you call the IRS to ask a tax-related question, then follow the IRS’s advice in completing your tax return and a mistake is found on that return, you, not the IRS, are responsible for the error, including any late charges, interest, and/or penalties. To paraphrase a quote from Lt. Frank Drebin of the movie “The Naked Gun” (an entirely appropriate movie when it comes to the IRS), “Like a midget at a urinal, you’d better be on your toes.”

It is the contention of those participating in this Blogburst that there is a better way, a way which is defined by simplicity, the complete transparency of all taxes collected (i.e., nothing is hidden), and one which requires no forms whatsoever on the part of the individual paying the taxes. The better way is, of course, the FairTax.

Under the FairTax, there is no need for forms used by the taxpayer. Most businesses are already completing similar forms for state and local taxes. The impact on these businesses will be minimal, merely one additional line on the state form. This means that rather than the almost 1,000 forms and documents currently needed by taxpayers and tax preparers now, one additional line on a form already in use will suffice, the form used by those remitting the collected tax to the Federal Government. All businesses serving as collection agents will receive a fee for collection, and the states will also receive a collection fee. The tax revenues from the states will then be sent to the U.S. Treasury.

Furthermore, the cost of compliance is greatly reduced. It is estimated that Americans spend at least $250 billion a year to comply with the tax code – that’s $850 for every man, woman, and child in America. Billions of dollars in compliance costs are wasted each year, and we have nothing of value to show for this expenditure – not one single productive service or product is added to our nation’s wealth. It is estimated that the FairTax dramatically cuts such compliance costs, perhaps as much as 95 percent.

Simply put, the FairTax is easier for the government to administer and easier for the taxpayer to comply with. These facts alone demand that the FairTax receive serious consideration.

The FairTax Blogburst is jointly produced by Terry of The Right Track Blog and Jonathan of Publius Rendezvous. If you would like to join us, please e-mail Terry or Jonathan. You will be added to our mailing list and blogroll.

FairTax Blogroll:

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