Sabitlenmiş Tweet
What if we could remove tax compliance and the remittance burden from individuals / businesses?
Automatic Remittance Tax System (ARTS):
**Not meant to be commentary on the progressive nature of the system but instead focusing on a simplified framework integrating income, consumption, capital gains and other taxes that can be calculated and remitted automatically.
1. Single Rate Flat Tax
- For Individuals: Implement a single flat tax rate across the board. For example, a 15% tax rate on all income after a higher standard deduction.
- Multiple W-2 Jobs or W-2 Jobs & Businesses would be taxed independently, each receiving the standard deduction. SSN’s are used to identify each individual so there is no multiple instances of the same SSN per company.
- For Businesses / Self Employed / Contractors: Similarly, apply a flat corporate tax rate, perhaps slightly higher to account for corporate benefits like limited liability, say 20%. This rate would apply to all business income after allowable expenses.
- Capital Gains: Capital gains could be taxed at the same rate as income, removing the distinction between ordinary income and capital gains. No distinction between holding periods.
2. Automatic Withdrawal System
Payroll Tax: For individuals, employers would withhold taxes from wages at the flat rate after applying a standard deduction per paycheck. This deduction could be a fixed amount or a percentage of income, adjusted for inflation annually. Employers would utilize PEO services such as @GustoHQ , @justworks, @Rippling etc for automation and reporting.
Self-Employment: Self-employed individuals would use similar software/tools that automatically calculate and withdraw taxes from their earnings monthly or quarterly.
Businesses: Corporations would have taxes withdrawn automatically based on their reported income, which could be done quarterly, similar to how VAT or sales tax might be remitted. If losses are incurred they would be automatically carried forward to the following quarter(s).
Capital Gains: Upon selling assets, financial institutions would automatically calculate and withdraw the tax due, much like how stock transactions are currently processed but with immediate tax calculation.
3. Standard Deductions and Credits
Instead of itemized deductions, everyone gets a standard deduction based on variables like marital status or number of dependents. This could be adjusted annually for inflation.
Credits for things like child care, education, or health could be directly added to annual taxable income or refunded, simplifying the process. See Digital Tax Filling System where these modifications would be made.
4. Consumption Taxes / State Sales Tax / Income Tax / Property Tax
To balance income tax simplicity, consider a national sales tax or a value-added tax (VAT) of 3.0% or at a low rate. This would capture consumption, which could supplement a lower income tax.
States could opt for a unified sales tax such as 5.0% and the combination of Federal + State tax could be automatically withdrawn federally and remitted back to each respective state to minimize regulatory burden on bsusinesses or contractors.
States could elect to maintain a minimal flat income tax that operates the same way as the federal withholding or opt for no state income tax.
Property Taxes can be adjusted and similarly automatically withdrawn unless opting out.
5. Digital Tax Filing System / Technology Integrations
Implement an online portal & system where tax information is updated and confirmed by individuals and businesses with data from employers, banks, and other institutions, requiring individuals only to verify information.
Leverage blockchain or other secure technologies for transparent, real-time tax tracking of tax remittance.
Reliance on transparent, open source AI and automation to handle all calculations, ensuring accuracy and compliance without human intervention.
6. Transition and Implementation
Phase-in Period: Give a few years for transition, during which the old system phases out and the new system phases in, allowing businesses and individuals to adjust.
Education Campaigns: Extensive public education on how the new system works, emphasizing its simplicity, transparency, and efficiency.
7. Audit and Compliance
Random or risk-based audits could still occur, but the focus would shift more towards compliance with the automatic remittance systems rather than manual filings.
Thoughts / Concerns / Issues...
- Generally requires cashless society or to acknowledge cash payments will go untaxed
- Contractors receiving payments into personal bank accounts
- Occupancy taxes, gas taxes, negative externality taxes or other taxes that would want to be at a higher rate
- Charitable contributions?
What else am I missing? Pros & Cons?
English
