Simplicity is the key to fair taxation. Complexity is the breeding ground for special interests. The shear number of different types of taxes is a ploy that doesn't serve the interests of the poor and certainly is used to create class warfare.
We don't like smokers, so we tax them higher. Someone else doesn't like rich folks, so we tax them another way. The rich don't like certain taxes so they incorporate or invest in specific ways to avoid taxes. We don't like corporations, so we tax them another way, even if corporations create the jobs we all say we want, including giving workers the money that is further taxed. They move jobs overseas and store their money in offshore tax havens. Complex taxation created these messes.
If the state and federal taxing authorities could only have one tax, a sales tax on all transactions, we'd end up with an extremely fair tax that wouldn't demand the wasteful efforts that occupy businesses, individuals and the IRS today. Filling out tax forms would be a thing of the past. Corporations and individuals would be treated fairly instead of creating all sorts of preferential systems that skew a truly free market.
Tax law should be easy to understand so that everyone can follow it and see that it's fair. Isn't it absurd that we are compelled by law to follow a tax code that is so complex that most CPAs and the IRS can't even give consistent answers to various scenarios. This is taxation without understanding, and it benefits those wealthy enough to hire folks who can play the tax game better than you can.
Until taxation is made truly fair -- taxing everyone the same based on what they spend -- special interests will rule the day and everyone will continue to feel that "the other guy" has an advantage over them.
A flat sales tax would impact rich and poor people, big and small businesses, and locals and foreigners the same. That's the very definition of fair.
Democratic candidate John Kerry likes to point out how Merk, a huge pharmaceutical company, kept $80 billion from being reported to the IRS because it earned and kept that money offshore. He thinks that the solution is to close such loopholes and let the IRS take something on the order of $25 billion of that for itself.
Needless to say, Merk would prefer to keep its $25 billion. Kerry needs another of his patented flip flops on this issue.
The Kerry answer (and Bush has nothing better, by the way) is simply one more nail in the American jobs coffin. The more regulations and taxes are imposed, the more business will move offshore to avoid them. With free trade growing, there will be no incentive to keep companies in the U.S., and the jobs and money will flow away.
Instead of picking on "rich corporations" (most corporations are actually small businesses that barely make any money since the whole purpose is to grow and pay employees and investors), it makes better sense to come up with a common flat tax on sales. It's so fair that even corporations that buy stuff will have to pay some taxes. A corporation shouldn't have to pay extra taxes because its purpose is to create jobs. Those who are paid for their work will pay the taxes. Those investors who benefit by the created corporate wealth will also pay taxes.
Today, most companies and wealthy individuals contribute lots of money to change tax laws and to hire CPAs who can do magic with their numbers and investments. It's time to get rid of the cheating by sticking with a simple, fair tax.
By picking a flat sales tax (with perhaps a special out for those who are buying something strictly for resale since the tax is only temporarily deferred until the actual sale), the rich would pay more because they buy more. Corporations would pay more because the bigger the company, the more stuff they buy. Foreign visitors would pay because they like to buy stuff when they're here. If a company moves offshore, but buys American products, they'll pay taxes. Even drug dealers would now pay their fair share because while their income is off the record and untaxed today, most of their purchases are legitimate (big cars, nice clothing, shiny jewelry, music, booze…).
While there would still be a crime world that would likely try to trade in goods in a black market, only a few would really be able to take advantage of it. After all, anybody who is selling TVs or cars to a large number of people without collecting taxes would likely stand out and be caught.
If the average person feels some things just have to be tax free, such as food that one normally buys at a grocery store, the benefit could be given to everyone, again fairly. The idea is that by removing a class of items, though, it must apply to everyone with the understanding that it will reduce tax revenues, and that either implies reduced benefits or a higher rate on everything else.
Let's stick it to the politicians and elite and demand a fair, flat tax instead of the complex tricks they've foisted upon us.