Tax Ideas, or how to improve the IRS by eliminating it.

I’m working on a theory so if this is a bit of a run on please excuse me. If you post your suggestions and they’re good I’ll try to incorporate them.

From my observations it looks like we still think about paying tax much the same way as people did 500, 1000 or even 2000 years ago. If you go back through the history of taxation it was paid with chunks of gold or bartering something real and needed like work, food or some other valuable good. The king could not write numbers on a ledger and trade it for gold, he still had to expend at least some resources to have the gold mined or acquire it from his subjects.

In this day and age we pay our tax by transferring numbers, they’re not even on paper anymore and strangest of all we are paying the government government money that the government issued. Seems odd we’re paying same people who made the stuff in the first place. It’s made out to not quite look that simple as a number of shell games have been invented to obscure this reality but the money in your pocket with the name of the country you are in right now is the same country that expects you to pay them back a percentage of this money and call it taxes. Seems utterly inefficient doesn’t it?

One of the main problems is the largest U.S. banks have made themselves the middlemen of our money supply and one of the things they’ve done is to lower the requirement that allows them to only have a small fraction of the money they loan. The majority of the funds today are loaned into existence by the banks when loans are made. Charter banks have the legal right to create money out of nothing, the banks are in charge of how fast the economy grows and how much money is in circulation, not the government. That’s one of the privileges of being a member bank of the Federal Reserve in the USA.

I also learned that the huge bank bailouts were facilitated with newly created money, the Fed (which is really just a group of the leaders of the largest banks) just wrote down a number and gave it to the banks. The Fed had no problems doing this for the benefit of the banks and in fact they cried that this was absolutely necessary. In effect the creation of the bailout and for that matter a portion of every loan issued by a charter bank has devalued every US dollar in existence by putting more dollars in the market. With no corresponding increase in the value of the economy if more dollars are created it reduces the value of every dollar. The day after the bailout your money was worth less and so was every US dollar, all the bankers seem to be alright with this happening.

Now think about this, what is the difference between taking funds out of your bank account or devaluing your dollar? If your wealth was reduced by the same amount you owed in taxes there is no difference. We really don’t need a huge expensive bureaucracy like the IRS. We don’t need to support the huge and very wealthy Tax Preparation Industry. Without these two groups the savings would be astronomical.

At least you can say the banks and the insurance industry and Wall St. do something, its not always the best thing and I certainly believe you should not base your economy on the money changers but you can sort of follow the money around and figure out something that looks like economic value but how about the IRS? The IRS is a hugely expensive operation that consumes a ton of resources and produces nothing, sounds like a pretty harsh statement but since all they do is re-handle numbers I think I’m pretty accurate. What takes the IRS years and hundreds of millions of dollars the Fed did in a couple seconds at zero cost.  Remember now the majority of money isn’t even printed on paper anymore, it’s just a figure on a ledger moved from here to there and in most cases it’s just made up from mostly thin air in the first place.

Here’s my solution. How about a system where the wealth and growth of the economy is calculated and the money needed to run the government is just printed the same way loans are granted and bailouts given? This would have the advantage of not needing a huge bureaucratic agency like the IRS or the Tax Preparation Industry. If we did this we would have a progressive taxation system that spreads the cost of running the country evenly over the users and owners of the currency which I thought was all of us.

I think my last line is the biggest problem, the wealthy people don’t want to spread the cost evenly, they seem to like a system that is easily gamed where the wealthy always come out on top. On “60 Minutes” in 2013 they spoke about the current recession and how during the last five years 95% of the American population lost wealth but the top 5% has had a 500% increase in wealth. How is it possible that a recession for the majority is really the boom years for the wealthy?

My idea would still require the population to file returns but they would be used to collect information and not extract funds. It would work much the same way the census is used, you could even pay people to file returns. Suddenly the underground economy would become part of the GDP, that’s billions of dollars from what I hear. I found a report from 2005, it said it costs $10 billion to run the IRS that year. I don’t know if that’s the entire cost but I suspect it leaves off much like the cost of using the courts and police to enforce the system. The private tax preparation industry is said to be worth $500 billion a year so a change to a tax that was built into the currency could instantly save a trillion dollars a year and expand the economy at the same time.

(Originally published November 4, 2010, edited December 3, 2012 and April 20, 2018)
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(Photo: facebook group Occupy Wall St.)
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