Should We Eliminate the IRS?

Feedback on Taxes

Quantus Insights recently ran a poll on American taxation. Thought I would share it with you. Here are some high points.

31% of Democrats strongly opposed the idea of eliminating the income tax and the IRS when you just asked the question, “Should we eliminate income tax and the IRS?”

If you ask a typical Republican voter, it’s almost unanimous that they want to eliminate the current tax system. Even if Elon starts a viable third party, no doubt they will favor eliminating income taxes. Libertarians are generally against taxes.

The younger generation that is now in their 30s/40s is entering the prime time of their careers. They have equity in companies. They might be partners, or working to become partners in something. They are moving up in corporations and adding corporate responsibility, making more money, and receiving equity options.

Suppose you work for a startup and receive equity. If you sell it, you pay ordinary state income tax on the sale, plus long-term capital gains. Because of other penalties put in place during the Carter administration, things like the alternative minimum tax will move you to a higher tax bracket. I know entrepreneurs from California who exited companies and paid 60% of the gain in income tax to the Feds and State. That’s horrible and unjust, given the risks they took starting or working for a startup company. There is no guarantee any startup will work. In fact, most fail.

The younger generations also see their parents getting older, and they are envisioning inheriting quite a bit of money. In the next twenty years, we will see the largest transfer of wealth in human history from one generation to the next. Why do we tax wealth and inheritance? The very wealthy families hire attorneys and tax lawyers and avoid it. The very very wealthy, call them the “billionaire class”, set up elaborate tax schemes and house money in places like South Dakota and the Bahamas to avoid wealth/inheritance taxes.

After explaining the benefits and proposing the idea of taking home 100% of your paycheck by replacing our current tax system, support for getting rid of the income tax, payroll tax, corporate taxes, capital gains tax, and gift and inheritance tax exploded off the charts. This is especially interesting when you look at political affiliation. A majority of all voters support the idea, including Democrats (52%) and Independents (51%).

The younger generation showed greater awareness than expected. 73% of those under 45 support the idea of eliminating the income tax and replacing it with a national sales tax. The younger voter population is ready for serious tax reform. If you are older than age 44, it’s time to get on board.

Fair Tax is a consumption tax that scraps the IRS and our existing tax system. Here is who has heard of it and their age ranges.

It is imperative, though, that we don’t replace the current income tax and the IRS with an alternative system that can still be manipulated by the Ruling Elite. A flat tax is exactly that. We must let Congress and the President know that the best way to replace the income tax and the IRS is with a consumption tax.

A consumption tax is a grave threat to the Ruling Elites and Deep State. It is a nuclear bomb on the existing bureaucratic system. It will strip them of their power and their ability to control us through the tax scheme. The opposition to changing from the existing system to a consumption tax will be fierce and unrelenting. The people who value government power and centralization need to have taxes in order to exert power over citizens. Just try to stop paying taxes and see what happens to you. Don’t think for an instant that the Elites and Deep Staters won’t use half-truths, deception, and downright lies in their desperate attempt to hang on to their power. Just see how hard it is to cut $9B from the federal budget today! Imagine redoing the tax system so it is truly fair and rewards innovation, work, and building wealth.

Academics support the idea.

What's the solution? Well, duh. Tax consumption, not income or wealth. Get the rich down at the Porsche dealer. Leave alone any money reinvested in a company that is employing people and producing products. Now we can do it. And we can then throw out the income tax, corporate tax, and estate tax.

Income is really meaningless. You earn a lot of income in your middle years, but little early and late. The year you sell a house, you're a millionaire, but then back to low income the rest of the time. Yet our government hands out more and more benefits based on income as if it were an immutable characteristic. It is not. Consumption is a lot more meaningful!

We always hear about the rich paying their fair share. For the complainers like Elizabeth Warren, the rich never do pay their fair share. She and others like her have been shouting this phrase for at least a generation. We have the answer for them. The rich will pay their fair share with one simple consumption tax.

The best course of action is to not only repeal the income tax and abolish the IRS but to repeal the 16th Amendment as well, so no future administration can ever shackle the American people with an income tax again.

You can do the math yourself with your own budget. If you make more than $60,000, you get taxed on every dollar after that number. The $60,000 is the prebate. People who earn that income or less pay no tax. Figure an 18% consumption tax on what you spend. This isn’t income, it’s consumption. There is also no tax on used goods because they have already been taxed. Consumption taxes avoid double and triple taxation. The consumption tax spurs a green and recycling economy. It also taxes the existing underground black market, the cash market, and illicit activities since it is a sales tax, not an income tax.

Study after study on income tax and what people pay winds up at Hauser’s Rate. That’s 18%. It sounds like a lot until you figure out how much of your income is already taxed. Remember, you get to eliminate payroll taxes along with income taxes, capital gains taxes, taxes on interest, dividend taxes, and all other federal taxes you pay.

People are moving to states where there is no income tax, and the state budget is based on a consumption tax. Florida and other states are looking to go further and get rid of property taxes, too! They are fleeing states with high income and high other taxes. It’s clear the sentiment is there.

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