The current income tax forces our nation's employers to collect taxes. The system is extremely wasteful. Each pay cycle, employers are forced to go through a complex process of calculating and paying an withholding tax for their employees. Each January, employers are burdened with the costly process of sending W2 forms to employees. Each April, Employees are burdened with filing complex tax returns.
The tax collection system is burdensome and absurd.
The FAIR seeks to simplify taxes by transitioning from an income tax to a national sales tax.
This tax shifts the burden of collecting taxes from employers to point of sales businesses. Small mom and pop stores will not be up to the task and we will sell thousands of businesses closing as a result of the FAIR Tax.
There is a much better solution.
This solution is called the Object Tax.
The object tax is based on the same system engineering techniques behind things like the iPhone and modern manufacturing.
The Object tax places a progressive tax on an object that lays between income and consumption. In most cases the tax is a bank account.
In this system, you would have your entire paycheck deposited into a bank account. You pay a tax to withdraw the money from the account.
The tax is progressive. The progressive tax rate will be based upon both income and net worth. If you are a millionaire, you will pay taxes at the highest income rate even if your salary is low.
The tax passes the Warren Buffett test. Warren Buffett will pay taxes at the highest rate even if his declared income is below the income of his secretary.
So, your entire salary will be deposited into an account. You pay a tax to withdraw money from your account.
Let's say your tax rate is 20% and the amount of money in your account is $10,000. Your statement would show that you have $8,000 that you can withdraw and a tax liability of $2,000. If you withdrew a tenth of the account you would get $800 and pay a tax of $200.
This would be a really cool system. The taxes will be collected in real time when you withdraw money from your bank account.
The system will remove the burden of paying taxes from the employer.
Unlike the FAIR Tax, which creates a substantial new burden for small businesses, the Object Tax does not create a substantial burden for banks.
Banks exist for the sole purpose of collecting money. All taxes, regardless of where they are collected, go through banks.
Banks exist for the processing of money.
The bank is the most efficient place to collect taxes.
Taxes will be collected in real time. When you withdraw money, the system will look up your progressive tax rate and charge a tax based on your personal rate on the spot.
The only reason a person would ever file a tax return is if there was a major miscalculation in one's calculated tax rate.
The Object Tax removes the burden of collecting taxes from employers. Unlike the FAIR Tax, the program does not create a new burden for small business. The program removes the burden of filing an annual tax return.
The tax is collected at the bank. Since banks are equipped for financial transactions and all tax transactions already go through banks, the Object Tax will not create a substantial new burden for banks.
By removing the tax burden from employers and allowing for real time tax collections.