Find Your Tax Code Soul Mate
You have a tax code soul mate.
Many people go their whole lives not knowing their tax code soul mate. Don’t be one of them. Find your tax code soul mate today.
There exists a tax code that fits perfectly with your principles and values. A tax code that, while it may not make you actually enjoy paying taxes, brings you peace. You’ll sleep well at night knowing your tax code soul mate is hard at work, raising revenue for the federal government or changing people’s habits according to your principles and values.
Your Principles and Values
What do you value? What is important to you? In what direction would you nudge the American people, if you could? What does your America look like in a few decades?
People value different things. Privacy. Fairness. Equality. Equity. Opportunity. Efficiency. Transparency. Simplicity. Frugality. Wealth. Power. What you value forms your views on tax code policy. What you value determines your tax code soul mate.
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If you think
tax policy
doesn’t matter,
read this.
To help you find your tax code soul mate, pay attention to what you like or dislike about the power Congress wields and the current tax code.
Maybe you’ll value a tax code that involves less paperwork. If you work a side hustle like driving for Uber or you are into day trading stocks, your experiences with the tax code might involve a lot of records management.
Perhaps the environment is your highest priority. Tax policy for you is a means to encourage people to reduce their greenhouse emissions. You want a tax code with the flexibility to alter the habits of individuals and corporations.
If you pick through the issues carefully enough, you’ll find your tax code soul mate hidden in there somewhere.
Clash of the Tax Code Soul Mates
Your tax code soul mate clashes with the tax code soul mate of other people.
Maybe you want privacy and simplicity from your tax code soul mate. The current tax code is neither private nor simple. But your neighbor wants equality, and that requires knowing details about how people get their money. And leveling incomes carries with it some complexity. The current tax code is almost certainly their tax code soul mate. You can’t both get your tax code soul mate. Somebody loses.
In a nation of more than three hundred million people, you’ll never satisfy all the people on something so personal as how you tax them.
Your representative must do battle in Congress if you want to see your tax code soul mate become America’s tax policy. Or, if your tax code soul mate is the current tax code, you need your representative to defend it in Congress.
Nothing is set in stone. Even if you get your way, people with different tax code soul mates will try to unseat you. The nation is always in flux. As the nation changes, maybe the people will want a new tax code.
We don’t have that flexibility with the current Congress. Congress won’t budge on the tax code. If you want a new tax code, you’ll have to change Congress first.
Tax Code Soul Mate Characteristics
A variety of characteristics make tax code soul mates unique. Your values affect your opinion of the characteristics of a tax code soul mate. As you evaluate the characteristics that make up a tax code soul mate, you may need to accept some characteristics of lower value to obtain characteristics of higher value in your tax code soul mate.
What characteristics should you seek in a tax code soul mate?
Privacy
You want to block government from knowing how you earn, give, save, and spend your money. You aren’t looking to launder money or commit any other crimes. It simply isn’t the business of the government what you do with your money.
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A simple tax code does not need a 900 page how-to manual!
Simplicity
The complexity of taxes gives you hives. Just the thought of having to organize, document, and itemize all your expenses for the past year overwhelms you. You’re OK with paying taxes, but does it have to be this exhausting? You’d love a tax code that makes it easy for you to pay.
Climate Change Prevention
Left to their own devices, people and businesses would drive the environment into the ground. Congress needs to limit climate change and the tax code offers powerful tools for incentives and punishments. You see these tools as critical to achieving your goals.
Power
Let’s be honest. The ability to tax is power, and power is the very essence of Congress. Your party wins a majority, and with that majority, your party can get things done. Taxing friends less and enemies more is what it’s all about.
Punish the Rich
Nobody deserves to have that much money. It’s as simple as that. The government should take earnings above a certain amount, be it $100,000 or a million dollars or some other amount. Congress needs the ability to set a ceiling on earnings.
Shield the Poor
High taxes on low earners irk you. Whatever tax code Americans choose for themselves must shield the poor.
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More than 400 pages dedicated to exceptions and exemptions.
No Special Treatment
The way Congress can pick winners and losers with the tax code bothers you. Maybe you see the tax code as nothing more than a means to raise revenue, not a carrot or a stick. The tax code should be a fixed set of rules, without exceptions or subsidies or exemptions.
Exemptions are often carrots in the tax code. Spend $40,000 to install solar panels on your house, get a $10,000 tax credit. Anybody qualifies for the tax credit, but few have forty grand to put up. You aren’t against solar panels. But is there another way to incentivize people to install solar panels without involving the tax code?
Skin in the Game
Maybe knowing some people have no skin in the (tax collection) game chaffs you. Even if it’s a token amount, you want to know everybody in the United States is paying something in taxes. You want a tax code that touches every person somehow.
Spending Money is Not a Tax Code Soul Mate Quality
We can agree on this.
- Congress taxes.
- Congress spends.
(Not necessarily in that order.)
Taxing and spending are unrelated. Sometimes spending looks like taxing. Under the current tax code, some people get a tax return that exceeds the amount of money they paid in. They paid taxes of a certain sum, but they received financial assistance of a greater amount. There is no such thing as paying negative taxes.
Your tax code soul mate has no influence over how Congress spends the money raised. It’s difficult, but separate in your head the act of raising revenue from the act of spending.
For the sake of argument, let’s say Congress raises all the federal revenue through a national sales tax of 25% on all purchases. A sales tax is the tax policy of the United States. If Congress then sends a $4,000 check to every person who earns less than $20,000 per year, that is financial assistance. Financial assistance is not a tax. And your tax code soul mate has no opinion of how Congress spends the money it raises or borrows.
Your tax code soul mate raises a non-negative dollar amount of taxes from every eligible individual in the United States. That dollar amount might be zero. It is likely more than zero. But it will never be negative. Your tax is always at least zero.
Congress has the right to spend your money in any manner the Constitution allows. If you don’t like how Congress spends money, your only recourse is to elect people who spend less money or spend money differently. This article is about your tax code soul mate, and spending is something entirely different.
Choosing Your Tax Code Soul Mate
What does a tax code soul mate look like? They take many forms. You can take one off the shelf or craft something new to the world.
To simplify the options, let’s focus on just a few tax codes.
- Income tax (current)
- Flat tax
- Head tax
- National sales tax
- FairTax
Maybe one of these tax codes is your tax code soul mate. Maybe you’d just tweak one of these. Or maybe your tax code soul mate is nothing like the tax codes listed here.
Income Tax (current)
You might be content with the tax code as it is today. It’s OK for you to take on the current tax code as your tax code soul mate.
The current tax code certainly appeals to people. We’ve had it for over a century!
Societal Change
You might take on the current tax code as your tax code soul mate if you value the ability to change society. The current tax code is by far the best tax code for nudging people in the direction you desire.
You might want people or industries to reduce their carbon footprint. Tax their harmful activities and you’ll get less of it. The idea is similar to attempts to reduce smoking by increasing taxes on cigarettes.
Political Power
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Your tax code soul mate might eliminate racism from the tax code.
No tax scheme offers you the means to improve the lot of your friends and punish your enemies like the current income tax. Congress can destroy entire industries through high taxes alone. The treatment of the coal industry versus the solar and wind industries offers you an excellent example.
You can get in on the action. A large retail chain can lobby for higher taxes on their industry, which sounds counter-intuitive, until you realize the large retail chain can afford it and their mom-and-pop competitors cannot. Taxes thin the competition.
Flexibility
The income tax provides Congress tremendous flexibility to adapt to changes over time. The 16th amendment, which altered the Constitution to allow direct and unequal taxation, places few if any restrictions on Congress. If you value the ability to adapt to just about anything, the current tax code ranks high as a candidate for tax code soul mate.
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How close can you come to paying no taxes?
Tax Avoidance
You want to pay nothing in taxes and still make a good living? The current tax code can help you try. You’ll work for it, of course. Structuring your finances around the tax code costs you time. Your income and spending must conform to the rules and regulations, and those change each year.
Your tax code soul mate might offer you a plethora of ways to reduce your tax exposure.
Flat Tax
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The Flat Tax. What’s in it for you?
Simplicity
The flat tax is simple. If the flat tax is 15%, you pay $15 for every $100 you earn. The tax form would be much shorter than what you fill out today. The definition of “income” will be the central point of contention since the tax code depends so much on this term. Beware attempts to redefine income to expand (and complicate) the tax code.Familiarity
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Is the flat tax all it’s hyped up to be?
Equality
Congress cannot pick winners and losers, nor may Congress rewards its friends and punish its enemies, with the flat tax. People and industries pay the same amount, whether big or small, rich or poor, powerful or weak. A point to consider here is that even the poorest wage-earner pays the flat tax. The flat tax is not a flat tax if the flat tax has boundaries. If you say, “Nobody earning less than $20,000 per year pays income taxes,” then you have a two-tier ($0 – $20,000, $20,001 and up) tax code. Not a flat tax. This is where the right of Congress to spend money comes in. Congress is free to send a check to anybody for anything, provided the majority in each chamber agrees. Congress, therefore, will collect the flat tax from all who earn an income, and turn around and send means-tested checks to offset the expense. Remember, spending money is not a factor to your tax code soul mate. You still get your flat tax soul mate. But if this solution appeals to you, recognize you’re getting close to the workings of the FairTax.Head Tax
The head tax is a flat amount due from each adult (or, possibly, person) in the country. Suppose the head tax is $10,000. Every person pays the federal government the required amount each year.
As with the flat tax, you’ll need a constitutional amendment to restrict the ability of Congress to return to an income tax or impose a sales tax in addition to the head tax.
Equality
The head tax might be the ultimate in equality, if you take the stance people are treated equally regardless of their actions. Actions generate income, and income differs from person to person.
Of course, you have a problem if a person earns less than the annual tax bill. Or, the person may earn more than the tax bill but not have enough money left over after paying the tax bill for shelter, food, and warmth. Do you put them in debtor’s prison?
Simplicity
No matter what, you know exactly how much you owe the federal government this year. This tax code leaves nothing to question.
Audits are Quick!
Some people live in fear of the IRS knocking on their door because they made a mistake on their tax forms. They get audited, and the audit lasts years and costs thousands of dollars.
Audits under the head tax are very straightforward. Did you or did you not pay the full amount of the tax? Got a receipt for that payment? Yes? We’re done. No? Write a check, please.
The government can trim down the number of people employed at the IRS, and the software that tracks tax payments will be far easier to maintain.
National Sales Tax
If you want to get rid of the income tax, the national sales tax is a potential tax code soul mate for you. You’ll have to repeal the 16th amendment to prevent Congress from reinstating the income tax. But many people find a national sales tax appealing.
The national sales tax involves Congress setting a tax rate to be applied to all purchases and services. Most people live in states with a sales tax, so a national version would be nothing new.
Nothing says Congress needs to set a single tax rate for all purchases and services. Perhaps Congress taxes luxury cars at a higher rate than economy cars. Or, to be consistent with the times, taxes a car with an internal combustion engine at a higher rate than an electric vehicle.
If you want Congress to set a single rate across the board, you’ll need a constitutional amendment clearly defining the terms.
You give up means testing on a national sales tax. Nobody wants to be behind the guy at the grocery store negotiating with the clerk over his income statement so the computer can determine what to charge him for sales tax!
Something to be decided is whether the sales tax extends to selling used items. For example, the person who buys a new car pays the tax but not the person who buys it from her. And do you collect national sales tax for each sale at your garage/yard sale?
A national sales tax in some form is the tax code soul mate for many people.
Simplicity
Assuming the number of tax rates is fixed at one or at least is few and well-organized, the national sales tax is simpler than the income tax.
The sales tax is simpler because you just pay at the checkout register or when you settle up with your plumber. In most cases, you can estimate a rough sales tax amount in your head when calculating the cost of a purchase or project.
No Tax Forms
If you despise or fear tax forms, a sales tax is an appealing tax code soul mate. You simply go about your life, doing what you would do anyway, and you pay your taxes as you go.
No Audits or Back Taxes
You have no worries about being audited or getting behind on your taxes. The sales tax is a “pay as you go” system. Many people fear the power of the IRS to take all they own, and that goes away.
The peace of mind knowing you are free from having a simple math error on a tax form cost you your life saving makes the national sales tax your tax code soul mate.
Unless you are the retailer or service provider who failed to remit the sales tax, you have little to fear from the IRS.
Privacy
The government has no need to delve into your finances if you pay all your taxes at the cash register. Most people never break the money laws, and have no need to worry about audits.
To provide services such as Social Security, the government has to track your earnings. The income tax forms provided that information to the government, and you no longer fill those out with the national sales tax. Perhaps Congress will make reporting such earning voluntary, meaning you forfeit the benefits, but you protect your private data from the government. This is not a part of your tax code soul mate.
Security
In the past, sending the IRS your entire financial statement involved little risk of having your private information stolen. You filled out a paper form and dropped it in a safe mailbox or handed to the clerk behind the desk at the post office.
Now, with so much being transmitted digitally, you risk being scammed or having your identity stolen if people get a copy of your tax forms. A copy of your taxes is on your PC, or on the PC of the person who did them for you, on the IRS server, and on any server in between.
The national sales tax solves this problem.
With the national sales tax, you no longer send a detailed listing of all your financial dealings to the government. That is one less attack vector you give cyber criminals.
The less you give out your private information, the less likely you’ll be cleaning up a data leak.
FairTax
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Learn why your tax code soul mate is the FairTax.
Privacy
Just as was detailed in the national sales tax section above, your income remains more hidden from the government than with the income tax or flat tax. If you want greater anonymity, you can forgo receiving the monthly check. The government needs your address and the Social Security number for every member of your household so it knows how much to send you each month.Simplicity
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Get the opposing view of the FairTax.
Protect the Poor
The FairTax builds in protection of the poor. The national sales tax has no such feature. Congress sets the monthly per-person reimbursement amount. This payment to you offsets the amount of money you spend in federal sales taxes for the month for your necessities. That’s food, rent, and utilities. If you oppose the income tax, but you want assurances the poor fare no worse in a new system, the FairTax might be your tax code soul mate.Flexibility
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Ready to try something new? The FairTax
Security
The FairTax is more secure than the income tax, in that you no longer send your entire financial history to the government one or more times per year. The FairTax is less secure than the national sales tax in that you still provide the government information about the people living under your roof. Your tax code soul mate might need to balance your values on this one. Less secure, but more favorable to the poor and more restrictive to Congress, than the national sales tax.Your New Tax Code Soul Mate
Did you find your tax code soul mate? You’ve learned the options available to you. You’ve matched your values and principles with a compatible tax code policy.
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Let the
Representation Amendment
help you find your
tax code soul mate.
You may have realized at this point that unless your tax code soul mate is the current income tax code defined by the 16th amendment, you may never see your tax code soul mate in practice. At least, not with Congress as it works now.
The current tax code benefits the members of Congress. It’s a free-for-all, and they control access. Politicians don’t let go of that much power easily.
If you want a chance to see your tax code soul mate in practice, look first to the Representation Amendment. Once you’ve ratified the Representation Amendment, proposals by members of the House will spark a national debate on the best tax code for America.
The people of the United States deserve a healthy debate over the way we’re taxed. Maybe we decide we’re good just the way it is. Maybe we make changes. The whole world has changed in the century since ratification of the 16th amendment. Perhaps your tax code soul mate is just what America needs!
