The Point of NO RETURNS

Mike Bell

• Publisher: Page Publishing, Inc.
• Year: 2018
• ISBN:
  9781642981186
• Topic: Business
• Subtopic: Taxation
• Index: Business

Business Will Flock to Our Shores, and "Made in the USA"Will Mean Something AgainWorking in cost accounting for billion-dollar corporations and analyzing cost variances taught me to get up from my desk and get out on the manufacturing floor to question operations. That led to a manufacturing management position and then to a corporate Engineering Control Review Board (ECRB) chairperson position. In that position, the board members and myself set the standard that no product build changes would occur unless they improved safety, reliability, or performance while protecting profitability.This is where I see America with our present tax structure and national debt. We are in need of an entirely new system where our advances in technology will control the income collected and eliminate the archaic labor-intensive monstrosity we call the IRS and its burdensome tax code. The IRS and the tax code need to be eliminated as unnecessary and replaced by a simple "automated banking" system with simple computer-coded instructions and no people, no audits, no loopholes. This system eliminates billions of wasted hours of record keeping and wasted hours of tax legislation by an overburdened Congress.

The Automated Deposit Transaction Tax Plan

A Simple Plan with No Loopholes

Note: Discussions and examples will be limited to federal taxes for purposes of simplicity and clarity, but realize that this system is intended to replace all other taxes and will work at all levels of government simply by adjusting the rate to one that is appropriate for the state or local government implementing it.

This simple tax plan is called the ADTT.

ADTT is like a consumption-based tax plan, but please get that out of your mind. I prefer to use the term transaction-based tax plan. Deposit transactions are the target. Tax all bank deposits. That’s it. That’s the plan. Just like the biblical principle of tithing, the predetermined tax percentage comes right off the top. No one has any choice in the matter because we would mandate that all banks do this automatically and electronically. This is big, this is simple, this is real-time, and this is cheat proof. Tax all bank deposits, with the exception of maybe a few, like church bank deposits, maybe. I really don’t think most churches would object since they benefit the most from operating in a free country under our constitutional freedom of religion rights.

No more payroll taxes, excise taxes, sales taxes, etc. Simple, fair, highly visible, unbiased, automated, self-enforcing, comprehensible, self-regulated, incorruptible, and more. Read on.

One of the biggest problems in all of taxation collections and enforcement today besides not having enough auditors to keep everyone honest is the tax gap. The tax gap is the $458 billion (yes, that’s billion) in tax liability that people failed to pay on taxable money they didn’t report (2008–2010) annually, money the government was “cheated” out of. Between underreported income and inflated or ineligible deductions taken, the present system is a nightmare to even think about enforcing.

Now that’s just federal taxes. Can you imagine the size of the total tax gap if state and local underreported income were added in? Unreported, underreported, unfiled, and uncollectible tax liabilities on income taxes, excise taxes, sales taxes, cigarette and alcohol taxes, property taxes, and all the other taxes the tax laws provide for is impossible to accurately monitor and enforce at any level of government. No wonder they’re all broke. And doesn’t it make sense that the more types of taxes there are, the easier it is and the more tempted individuals and companies are to cheat?

Here’s a way that cheating happens. Think of a stoplight, a blinking red light, a stop sign, and a yield sign. You know three of the four are going to get “rolled through” by most drivers. The stoplight is the dominant control device that 100 percent of motorists will obey. The other three are not necessarily dead stops.

Easily rationalized, “I stopped,” you’ll say. It is the same when people are overtaxed. With too many taxes and too many types of taxes, they are going to rationalize that paying some tax is paying their fair share. So they cheat (roll through) where they can.

So I say target that underreported, unreported, unfiled, and uncollectible tax on income by targeting all the money people and companies deposit into the bank. That is the first step in an audit anyway. The IRS looks at bank deposits and compares it to what was reported on the tax return. Generally, on a suspect return, the income is understated, resulting in a lower tax liability for the taxpayer. The tax gap includes unfiled tax returns but only as an estimate in the $458 billion. The unfiled returns, however, are probably grossly underestimated in those figures because there are millions of people making money in so many different ways these days, the government has no idea how to track it all.

Take house flippers for instance. It is up to the attorneys who close the sales to issue a 1099-S. But do they? They aren’t accountants. They don’t have tax software. What incentive do attorneys and contractors have to send their CPAs a list of all house closings they did and be charged for the issuance of 1099-Ss? Many attorneys simply do not do it. There is nothing in it for them, and their clients most likely wouldn’t use them again. Or do they just assume that the selling client has his accountant doing the 1099-S issuance?

What about eBayers, Craigslisters, and so many other “items for sale sites” facilitating the selling public who are selling goods and services out of their homes? Okay, the IRS is making headway there. But what about all the guys running around with magnetic signs on their trucks claiming to be painters, carpenters, and full-time or weekend landscapers? There’s no way to capture all that income. The government is making inroads ever so slowly there, but in the meantime, they just increase your taxes to cover the gap.

How ADTT captures all income and eliminates underreported and unreported income is by taxing all deposits at 5 percent with no regard to anything except a few categories we could exempt. That gives us a tax system based on bank-deposit transactions. All bank-deposit transactions will be taxed with only a few exceptions. Five percent is used for illustrative purposes, but the rate could be as low as 0.5 percent. That’s right—one-half of 1 percent. Our economy is huge.

This is based on the fact that the base, bank deposits, is so wide. What a wide base it is—a base so wide, it encompasses every financial transaction that takes place every second, every minute, and every hour of every day, every week, every month, all year long; a base so wide that the tax percentage could be as low as 0.5 and still cover federal income tax, Social Security and Medicare, and everything else. I will use 5 percent in discussing this proposal.

All tax collections would be made by banks, on daily deposits, electronically. Then the banks would electronically transmit those funds to the government. I’ll get into more details further on, but I gave it to you plain and simple right up front. That’s the plan—tax all deposit transactions. No lengthy or complicated tax laws required. No more payroll deductions. Take home your whole paycheck and your 5 percent tax that is taken off the top and sent to the government when you make your deposit or cash your check. No more tax returns to file. No more record keeping to prove any deductions for tax time. No more mail labeled “important tax information” every December. No W-2s, 1099s, or other documents.

This system could be applied at the federal, state, and local levels and thereby eliminate the need for all other taxes. But again, let’s just get this going at the federal level to start. Let’s begin generating enough revenue to fund the budget, reduce the debt, and eliminate deficits without burdening anyone.

We adequately fund government and end up with more disposable income for consumers as a result. And what do people do with disposable income? They move it by spending, saving, or investing it. When they do, and the money goes into another account by a deposit transaction, the system captures 5 percent for the Treasury. Spending, buying, and investing creates a dynamic economy where more deposits by more stores equals more tax revenue.

This system gives the control back to the citizenry because there are no more hidden taxes, and the only way to change the rates will be by popular vote.

The Implementation of ADTT

The first step would be to implement this ADTT system across the board. This way banks are the only organizations collecting and transmitting taxes and thus the only ones who need to be regulated, legislated, and audited.

The second step would be to declare all other tax laws obsolete and eliminate them at the federal level. They are simply no longer needed. All taxes would be covered as a percentage of gross deposits and would be electronically collected and distributed to the proper government.

Just like a new version of any software package or video game, it happens on a day or overnight—just one day. This kind of thing happens every day in this country. Grand Theft Auto Version X comes out, and it’s in every store and people line up at night and camp out on the sidewalk to get one. Or the iPhone or the iPod Nano or whatever comes out, and the same thing happens. In those cases, it is a bigger deal than what I’m talking about with a tax program because the manufacturers have to produce, ship, package, and make the product available through their distributors to retailers all over the country on the same day. That is a big task. It takes a lot of development secrecy, coordination, logistical planning, and marketing. But they do it. And they make billions.

Just because the present tax system is so big, don’t think that we can’t do this. Just think how easy it is to throw away your phone book for online phone listings. The ADTT system is just like that. I am not rewriting the tax law. I’m just tossing it into a landfill. The new code is thinner than this publication you’re reading.

The government would have you believe that you can’t live without all those crazy tax laws, a huge tax code, and the huge mess they’ve made of revenue collection. They’d have you believe they don’t know how to redeploy all the employees they have who do that work. Well, don’t believe any of that. As far as redeployment of government employees, we have all kinds of jobs in more important understaffed agencies. They should be able to figure that out. If not, here is the perfect new industry to start up—government-employee redeployment coaches. Remember, Jobs didn’t care about putting encyclopedia companies out of business. He just did it. Ford and Edison didn’t care about putting buggy builders or candlemakers out of business. So don’t worry about the lobbyists, accountants, and tax practitioners out of business. They are smart people who will figure out something. Don’t worry about your real estate mortgage interest deduction or your state tax deduction or the devaluation of your house. You’ll have two houses with the additional money you have.

My system needs no gatekeeper. This is simple. And redeployment of employees is easy too. We have it covered—border patrols, HHR, DOE, DOJ, FBI, DOA, DOI, DOS, CDC, ICE, FDA, FCC, and the dozens of other agencies crying for help. Why not? We’ll have the money for all of it under this plan, especially when jobs come back here (covered later). The robust growth economy and full employment that this tax plan provides will give individuals, companies, and the government more...