The IRS is a Criminal Enterprise and it Should Go Away

The IRS, the most powerful and least accountable agency of the federal government, is an admitted criminal enterprise. To deal with this, Republican candidates for president are placing tax reform at the top of their agendas. You will have to guess why the Democrats seem not to care.

Sen. Ted Cruz (R-Tex.) has been the most vocal. He has been pushing the abolition of the IRS for three years. He favors a flat tax on income that can be filed on a post card.

Sen. Marco Rubio (R- Fla.) and Sen. Mike Lee (R-Utah) have introduced a comprehensive overhaul of the tax code. Their bill would improve economic growth by allowing businesses to expense capital investment, eliminate double taxation on capital gains and dividends and tax income only in the nation where it is earned.

They also increase the child tax credit and change the standard deduction from a tax deduction to a tax credit. They have only two tax brackets.

In an interview on FoxNews Sunday with Chris Wallace, Gov. John Kasich (R-Ohio) expressed support for a flat tax.

Others have spoken about the “broken system” and the need for reform, but we’ve heard that song before. Absent a specific plan it means nothing.

Unfortunately, any reform that continues to depend on taxing income will, necessarily, keep the IRS in place. It may be rebranded. It may be chastened for a time. But it will be there to come clawing back into your life in due course.

The Tax Reform Act of 1986 was considered one of the most significant pieces of legislation ever passed. It reduced the numbers of tax rates and dramatically reduced and simplified deductions.

The income tax structure, though, remained in place and within 20 years it had been amended 15,000 times.

Today’s tax code is 74,000 pages of complications and regulations that are understood by no one, including those whose job it is to administer the law.

Over half of those calling the IRS help line do not get through. Of those who do get through to an IRS “helper” about half of the answers are wrong.

Former Gov. Mike Huckabee (R-Ark.) is the only candidate who has committed to abolish the IRS completely. He supports the FairTax, a retail sales tax on the personal consumption of new goods and services.

All taxes on income are repealed. No more taxes on business or investment. No more personal income taxes or payroll taxes. No more filing tax returns – even on a postcard. No more IRS.

The current code, in addition to punishing productivity, also creates expensive and wasteful dislocations in the economy.
• $2 trillion each year is driven into the underground economy – untaxed.
• The price you pay at retail is inflated by 22 percent because of the current tax code.
• The Mercatus Center at George Mason University estimates that we spend over $500 billion each year just to comply with the code.
• More than $20 trillion is held in off shore financial centers because it is too costly to repatriate the money.

All of those dislocations would be fixed by eliminating taxes on income and moving to the FairTax. None will be impacted at all by nibbling around the edges of an income tax system.

The average taxpayer today pays about 23 percent of what is earned (15 percent income tax and about 8 percent payroll tax.) Under the FairTax everyone would pay 23 percent of what is spent. Anything not spent is not taxed.

The tax is collected by the states and 45 already have a sales tax collection system in place.

Essentials are untaxed by providing a distribution at the beginning of each month – a prebate – that would allow every household to spend up to poverty level spending with no tax consequences.

Poverty level spending is that spending necessary to buy essentials and is determined each year by the government. Today a family of four would receive a prebate of $611 per month so that they could spend $32,000 a year untaxed. All legal residents would be eligible for the prebate.

Any tax reform that simplifies our lives is an improvement, but any tax reform that continues to tax income will keep the IRS in place and will only be temporary.

A free society should never have its personal information superintended by a criminal enterprise. The IRS has proven to be just that and only the FairTax will permanently remove them.