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IRS Pushes for New Reporting at Expense of Privacy 175

Posted by ScuttleMonkey from the damn-the-consumers-full-speed-ahead dept.
angelheaded writes "Brian Krebs from the Washington Post is reporting that the Bush administration is proposing a new tax collection program that would force credit card companies to report merchants' income to the Internal Revenue Service. The plan has come under fire from privacy groups, who say it will create another private sector database tied to Social Security numbers at a time when ID theft experts are urging companies to wean themselves from the use and collection of such information."
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IRS Pushes for New Reporting at Expense of Privacy More

IRS Pushes for New Reporting at Expense of Privacy

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  • Surprise? (Score:5, Insightful)

    by mh1997 ( 1065630 ) on Friday May 23, 2008 @02:15PM (#23521348)

    IRS Pushes for New Reporting at Expense of Privacy


    They have always invaded privacy to collect money. Why is this news?

    • Re: (Score:2, Informative)

      by daseinw ( 244962 )
      Surprised? No.

      Why is it news? Because that's our only hope of changing the behavior for the better.

      I get where you're coming from but I have to admit, I'm really discouraged every time we hear one of these stories and the first thing you hear is a chorus of sarcastic, "what a shock!" responses.

      This is news because this is something that should upset us enough to actually provoke us into ACTION. Writing our senator. Going to a senator's office. Threatening to withhold our significant or not-so-significant ca

      • Re:Surprise? (Score:5, Informative)

        by sumdumass ( 711423 ) on Friday May 23, 2008 @04:41PM (#23522896) Journal
        You know, I don't see how this is any different then requiring an employer to submit a 1099 for contract workers and other similar paid people. I mean the changes are so it reports the total amount of sales (income) a merchant or business owner has made through a credit card account. It would almost be the same as the card companies issuing a 1099 to the merchants.

        The call to arms about social security numbers is a little weak too. I mean it isn't like the US government (IRS) doesn't already have the numbers when anyone else does a 1099 or they report their own income. All that would be necessary is for another field in an existing database to be set with a "credit income" tab or something and treat it like all other IRS information.

        The people who are really at risk here are the ones who sell things on line and don't report it to anyone. That is why there is a big problem with it. Now, If your going to be doing any business with people paying you by credit cards, your going to have to report it in some way. The fact that small businesses use their SS number as their TIN number is sort of irrelevant, the IRS would already have that information anyways. The credit card companies would already have that information stored for a year or more anyways too. The only difference now is whether the government gets information on the amount of sales you do by credit cards or not. That is the only material change in this.

        • Re: (Score:3, Interesting)

          by mpe ( 36238 )
          You know, I don't see how this is any different then requiring an employer to submit a 1099 for contract workers and other similar paid people. I mean the changes are so it reports the total amount of sales (income) a merchant or business owner has made through a credit card account. It would almost be the same as the card companies issuing a 1099 to the merchants.

          The real SSN problem is their use for completly unrelated purposes. Including as proof of identity.
          Using them as an authenticator rather than a
          • I'm not sure they are being used in any ways other then existing employment or banking standards though. Everything was quite as far as people protesting a use like this for banking and proper crediting of taxes or tax liability. This measure does little but provide the IRS information towards who is receiving something just like bank or employment reporting would be. (The banks report your interest) The government after all, is the place that stated the SSN sytem to identify people with the same names and

    • No, It's *NEWS* (Score:3, Interesting)

      by Doc Ruby ( 173196 )
      Who said it's a surprise? It's "New Reporting", which is why it's "news". New things that are important are news (you can tell by the spelling).

      What is this bizarre dismissal of important stories just because they are new developments that meet low expectations? Do you have something against people being informed that our worst expectations are being realized? Or are you Bushlike in equating your purely imaginary prior beliefs with their actual materialization?

      • Re: (Score:3, Interesting)

        by mh1997 ( 1065630 )

        ...Or are you Bushlike in equating your purely imaginary prior beliefs with their actual materialization?

        Huh? Imaginary beliefs? The IRS requires you to testify against yourself to obtain information. The IRS cannot do its job without invading your privacy.

        Do you have something against people being informed that our worst expectations are being realized?

        No, if people were slightly informed how the government collects information, they would be outraged. If people read the constitution and if our governme

        • Re: (Score:3, Interesting)

          by Doc Ruby ( 173196 )
          OK, just a note to dignify your tangential paranoid ravings. Your imaginary beliefs evidently include your foreknowledge of this new proposed reporting system, because you deny that it's news.

          Somehow your disappointment that people aren't more informed is the reason that you complain when some news tries to inform them of something new coming around that neither you nor they will probably like.

          Oh, and the Constitution grants the government the power to collect taxes, which includes income taxes when Congres

          • Re: (Score:2)

            by mh1997 ( 1065630 )

            Oh, and the Constitution grants the government the power to collect taxes, which includes income taxes when Congress passes the laws

            Never said it didn't, nor did I say that the government cannot collect taxes. Congress spends money on many things that the constitution does not allow for.

            We probably agree more on this issue than you think. My comments are just short and not completely explained because I am not a fan of long posts (from me, I enjoy long posts from others).

  • Worthless data... (Score:4, Informative)

    by SoCalChris ( 573049 ) on Friday May 23, 2008 @02:15PM (#23521356) Journal
    How would they figure the tax from the merchant's credit card revenue? They could have very high revenue, but low profits, or vice versa. You wouldn't be able to tell only from their CC processor history.

    • Re:Worthless data... (Score:5, Insightful)

      by mckinnsb ( 984522 ) on Friday May 23, 2008 @02:41PM (#23521658)
      Regardless of what they say publicly, my guess is that they are probably seeking the information not just to keep tabs on the merchants, but to keep a better lock on consumers. A lot of consumer capital goes through small business owners, that might be the people you buy groceries, liquor, cigarettes, sandwiches, meals, etc from. You do have to report how much money you earn every year, but you *don't* have to report what you spend it on (unless you write it off or it meets other specific criteria). I'll get to why that is important, later.

      They can retrieve this information because from what I have gathered, they are proposing to withhold the actual receipts of sale, and the receipts would contain information regarding the two parties involved in the transaction -when, where, how much, and possibly why.

      Granted, they are only proposing to hold 28% of these receipts, so this would by no means be a comprehensive or continuous record of consumer activity, but it could be used in a red-flag "Monte-carlo" algorithm-type approach - pick a few of the receipts, try to look for a few fishy ones by passing them through a filter, and then investigate (audit) any receipts that match that criteria.

      For example, certain things don't need to be reported to the government when sold to an independent merchant (or even a larger business). If the seller makes a profit on the sale (assuming the seller doesn't own a small business or the sale is not related to his business), that profit is essentially invisible to the government. While in some cases this profit is taxable or not taxable (depending on what you sell) this law would make those profits visible, and would make the taxable things visible and thus enforceable. It would give an argument in Congress for those currently nontaxable profits to become taxable through an "ease of enforcement" arguement.

      That being said, I don't really think the government needs to tax more than it already can and does, unless I start to see some dramatic increase in what I get out of my government, and honestly, we have other things we could be spending our money on. I'm really not worried about a business owner taking a few friends out to dinner and writing it off on his business card as an expesnse - I'm more worried about millions of dollars lost in other places.

      • Re: (Score:3, Informative)

        by russotto ( 537200 )
        By "withhold 28% of receipts", they mean that the credit card company would withhold 28% of the payments they would otherwise pay to the merchant (and presumably send that directly to Uncle Sam), if the merchant didn't provide a TIN. They don't mean the IRS would get the actual transaction records on a routine basis.

        • Re: (Score:2)

          by JonWan ( 456212 )
          They do this and my credit card processing machine goes in the trash. I'll deal cash only, the customer will just have to go to the ATM to get it. I might lose a customer or two but not 28% of my credit card income.
          • Lol.. You won't lose 28% of your credit card income. That is only if you didn't give a TIN number with the merchant account. And in the end, that 28% counts as a credit towards taxes paid already which means that you would be getting a refund.

            This is no different then requiring an employer to provide the IRS with a 1099 or W2. The only way you would lose 28% of your credit card money is if you were attempting to conceal your identity in order to conceal portions of your income so as to avoid paying taxes on

            • Re: (Score:2)

              by JonWan ( 456212 )
              But the point is I pay enough in quarterly they don't need to keep even more of my money. Besides I don't get refunds,if anything I'll pay extra at the end of the year.

              • They will only keep your money if you don't list a TIN (tax payer ID number) with your merchant account for the reporting to goto the correct places. That is the suggested idea behind the 28% withholding. A TIN number is also your SS number if you havn't applied specifically for a TIN number. Here is a list of what TIN numbers are. [irs.gov] I'm not sure how long that link with be valid but simply search for TIN at irs.gov amd you will find the page.

                Now if your a legit business and paying your taxes, you already have

      • Re: (Score:2)

        by sm62704 ( 957197 )
        Regardless of what they say publicly, my guess is that they are probably seeking the information not just to keep tabs on the merchants, but to keep a better lock on consumers

        Oh no! My credit card receipts from marijuana dealer and my hookers will all bust me out!

        More seriously, they act as if cash has been outlawed. I haven't used a credit or debit card in quite some time, and the only place I cash chekcs are the bank and two local bars. When I cash checks at the bars I almost always cash them for more tha

        • Oh no! My credit card receipts from marijuana dealer and my hookers will all bust me out!

          Actually, there seems to be a bit of confusion here. They aren't asking for or looking at what you as a consumer do. They are wanting the credit card companies to report what merchants do. It would be more of that bar you cash your checks at having all the money from customers that paid with credit cards being reported to the IRS. It won't be a itemized Joe or sm62704 purchased 10 beers on Saturday. It will be the cr

      • That being said, I don't really think the government needs to tax more than it already can and does

        If everybody paid their fair share, the rate could go down for everybody - including the honest people who already pull their weight.

        OK, it's unlikely to work that way (governments can always find a way to spend some more), but your "OMG taxes are teh bad" rant lacked a little analytical depth (though it went down well with the crowd, as all such glib soundbites do round here).

        • A great many people pay more than their fair share for much of their lives and have to petition the IRS to get it back every year. It's not so much a department of revenue as a government enforced protection racket.

        • If everybody paid their fair share, the rate could go down for everybody - including the honest people who already pull their weight.

          There is no consensus as to what a fair share is. (But most people agree: their fair share is less than what they have to pay.)

      • not just to keep tabs on the merchants, but to keep a better lock on consumers [terrorists]. A lot of consumer [terrorist] capital [funding] goes through small business owners, that might be the people you buy groceries, liquor, cigarettes, sandwiches, meals, etc from.
        and you've probably got it. Orwell would be proud.

    • Re: (Score:2, Insightful)

      by rosaliepizza ( 951681 )
      It is not worthless data to agents who have statistical models of every small business imaginable including love offerings made to preachers to every mom and pop storefront ongoing. It is a simple thing for them with this information to flag out of ordinary transaction totals relating to sales and gross income reporting which they compare to other numbers provided on your 1040. If your credit card sales are extremely high compared to gross sales vs other busisnesses in demographic area you are a match for m

    • Re: (Score:2)

      by qbzzt ( 11136 )
      Taxable income = - .

      Expenses are supposed to be backed by receipts and are therefore auditable. There are a few exceptions, such as miles driven in a personal car for business purposes. However, those exceptions are limited in amount. You can't claim that you drove 1000 miles for your business every day of the year.

      Gross revenue is a lot harder to audit. If somebody paid you in cash, you have no receipt for the IRS to require. If somebody paid you by cheque, you can go to the bank on which it is drawn and
    • According to the IRS, all income is profit until you document expenses. Much like stock sales.

  • I wanna know why we need more government. (Score:5, Insightful)

    by g0bshiTe ( 596213 ) on Friday May 23, 2008 @02:20PM (#23521420)
    Seriously do we really need the extra tax dollars spent, man hours, and all that goes with it so the government can get more money?

    I'll tell you if it doesn't pass, you will see it sooner or later under the guise of "searching for terrorist finances".

    • Re: (Score:2)

      by bsDaemon ( 87307 )
      Terrorists don't use credit cards. Anyone who doesn't use a credit card is a terrorist, undermining America. If you don't go into debt RIGHT NOW the ECONOMY will collapse and Warren Buffet will only be a 100x MILLION HEIR instead of a BILLION HEIR!!!

      Think of his children!

    • Re:I wanna know why we need more government. (Score:5, Insightful)

      by jellomizer ( 103300 ) on Friday May 23, 2008 @02:34PM (#23521592)
      What do you expect the government to be responcible with the money they already have. Layoff thousands of useless unioned employee workers. Determinin the value where each dollar is going and determining if it is worth funding or not...

      That is not how the government work, people will CRY oh why cant the government do this. Then they goverment will do this... Then a bit later they complain that the government didn't do it the way they wanted. in D&D terms the US Government is a lot like a wish spell with a tricky DM. You get your wish but it has a consequence that you didn't forsee.

      • Layoff thousands of useless unioned [sic] employee workers.
        This typical ignorant view that most government employees are lazy union members is simply not borne out by actual facts. As with any employer, there are lazy workers everywhere. As to unionization, do you object to government employees making a living wage? Or is it simply jealousy that you make low wages in a sweat shop?

      • Re: (Score:2)

        by mikael ( 484 )
        Layoff thousands of useless unioned employee workers.

        The way government works is that if any department has to make cutbacks, it's the front line workers who get fired - cutbacks in the education department? Get rid of some experienced teachers.
        Budget shortfall in the environment department? Reduce bin collection service to once per two weeks.

        Above a certain management level, if any two groups are merged, one person must be promoted to a senior level, and the other person must be offered an equivalent posit
    • Seriously do we really need the extra tax dollars spent, man hours, and all that goes with it so the government can get more money?

      for a 'republican' (gwb) he SURE is causing a lot of hurt in his own party.

      I remember the R's always complaining about D's being too tax-hungry.

      seems the R's decided their view was wrong all along. however, I can't say I'm happy to see them admit this.

      • It is who ever is in power will be Tax Hungry.
        They all come to the office with a bunch of Crazy ideas that need to paid for.

        Most polititations don't get elected on. Let the market eventually correct itself. Which it would but it would be a huge hurt. They much rather delay the problems with the echonomy by giving it a boost so there is no depression and they all get elected out.
      • Comment removed based on user account deletion

        • Is? IS!?? He HAS can continues to do so.
          I'm going to take a stab at correcting your grammar error. Did you mean this?

          Is? IS!?? He HAS and continues to do so.
          Cause that's, you know, what "is" means. You just broke it up into its component parts.

      • Re: (Score:3, Interesting)

        by plague3106 ( 71849 )
        Huh.. I remember R's always being tax hunger, unless you're talking about Big Business. R's were never the friends of ALL business, only big business.

      • I remember the R's always complaining about D's being too tax-hungry.
        There's a reasonably good chance that they'll start complaining again in 2009, just like they did in 1993. But now is not the time. Pretending to be conservative is for when Republicans are not in office.
    • We the people don't need more government. We might not need any government at all, considering that all government seems to do is rob us, murder us, and indoctrinate us. Humans need society, but they do not need a government that acts like a parasite upon society.
    • They aren't going to spend any more tax dollars. They're just going to make a law requiring that businesses do the work for them, thus forcing more overhead for all businesses.

  • What's the big deal? (Score:5, Informative)

    by surmak ( 1238244 ) on Friday May 23, 2008 @02:22PM (#23521438)
    According to the article, the IRS is only asking the banks to report the IDs of those receiving money from credit card transactions. Your purchases are not reported, only the aggregate of all the purchases of a business. This information will help to locate tax cheats. I would have a serious problem if the IRS got a list of where every consumer made a CC transaction, but that is not the case here.


    The privacy issue is not a concern either. Even if it is a small business using the owner's SSN the IRS already has that info on tax forms, W2s, and other data they get from banks. This personal information will not be shared with anyone outside the IRS anymore than one's 1040 is.

    • I would have a serious problem if the IRS got a list of where every consumer made a CC transaction, but that is not the case here.
      DON'T GIVE THEM ANY IDEAS!!!

      All kidding aside, how long do you think it will be before they DO start doing this? After all, this is the government we're talking about...
    • You are incredibly naive and lack perspective.  You are arguing that no FURTHER intrusion on citizen's privacy is being suggested, and furthermore that the IRS can be trusted neither to lose the information, nor abuse it.

      As a slashdotter, you should know better than that, at least.

    • Re: (Score:2)

      by bartok ( 111886 )
      What doesn't make sense is that buying something with a credit card does not mean you are making that kind of money. It would be much more relevant to report the amount that was reimbursed to the credit card company during a given year.
      • The credit card company is supposed to report the amount of money they (supposedly) gave to the (alleged) seller.

        The biggest threat appears to be identity theft for the purpose of illicit credit card transactions for the seller. For example, a v1@gr@ seller might steal someone's identity set themselves up as a seller and close the account 6 months later and disappear leaving their victim with 6 months of credit card income they know nothing about.

        I'm not sure how realistic that outcome is. You're supposed
  • It's been quite obvious in the last few years especially, that transactions on a credit card don't reflect "real" monetary transactions. How many people spend way more than they can afford, and pay back little for long periods of time. Also, it seems bad policy for a gov't to know how and where you spend money. There is no reason they should have record of that. Imagine the legal power of having records of the spending of a Senator for example. Imagine the blackmail power that would give the IRS.
    • How is this marked interesting? This is about the merchants (say, retailers or service providers, who have to push credit card revenue through their banks) having their aggregate incoming cash take by that channel reported. This would be rather helpful if you were to spot, say, an escort service collecting hundreds of thousands of dollars against a bank account owned by someone who only reports the income from their day job as a marketing consultant. Or a partnership running a restaurant for years on end, r

  • Meanwhile... (Score:2, Offtopic)

    by LockeOnLogic ( 723968 )
    Corporations commit egregious tax and accounting fraud and little to nothing happens. Once again the big thieves hang the little thieves...

    • Re: (Score:2)

      by Kohath ( 38547 )

      Corporations commit egregious tax and accounting fraud and little to nothing happens.
      Which ones? Or is this just some kind of free-floating slander that applies to all members of this group (because you're bigoted against them)?

  • WTF? I already report my income from credit cards (Score:5, Insightful)

    by Anonymous Coward on Friday May 23, 2008 @02:29PM (#23521540)
    I already report and pay sales tax from my income from credit card transactions.

    And what the hell does the IRS care about my local city, county or state sales tax? Oh they want to make sure that I, as a small business owner, am reporting my income correctly? Fuck Off, I already do, audit me if you want you lazy fuckers, but stay the fuck out of my records unless you are doing an audit.

    They can't possibly figure out my take-home income from credit card transactions anyway. They don't know if my expenses are 10% or 90% of those transactions, nor do they know how much of my business is cash or check.

    Small businesses that want to hide income already know how to do this, they are cash only businesses. Allowing credit card transactions and avoiding paying taxes on that income is just asking for trouble. Well avoiding paying taxes in anyway is asking for trouble.

    Let me and my accountant do our work and don't change a thing.

    I can only see this leading to problems.

    • nor do they know how much of my business is cash or check.

      Excellent point. But wait around an administration or two...

      Not that I lose much sleep about privacy for businesses. I'm a business owner myself, in a highly regulated industry, subject to inspections and audits at any time. I have no expectation of privacy whatsoever. It would be simpler for me if I did have privacy, and I'd provide better service without regulatory overhead. But society won't unravel if corporations open their books to the IRS, or to the public, for that matter.

      Now personal pr

  • Makes my head hurt (Score:3, Insightful)

    by pauljuno ( 998497 ) on Friday May 23, 2008 @02:34PM (#23521596)
    The Bush Administration is pushing for bigger government, great ... just great. He's a Republican too? I'm so confused.

    • Re: (Score:2)

      by geekoid ( 135745 )
      Dude, republicans have been doing this starting with Reagan.
      Republicans are about spreading the word of God through any means what so ever. really, there is no other reason for most the stuff they do, and there certianly isn't any logic behind most of it.

      • Re: (Score:3, Insightful)

        by sm62704 ( 957197 )
        Republicans are about spreading the word of God

        You mean like "the love of money is the root of all evil"? Or "Judge not, lest you be judged yourself?" Or "Thou shalt not covet thy neighbor's [property]"? Or "It is as hard for a rich man to enter the kingdom of heaven as it is for a camel to pass through the eye of a needle?" How about "if a man asks for you coat, give him your cloak as well"?

        That doesn't describe any Republican I ever met. The Republican Party is the party of the rich. They don't worship G

        • This last political cycle showed there are some strong divisions within the republican party.

          • McCain - fight the terrorists Rs
          • Paul - a classic 'R', small gov, strong constituionalist
          • Romney + Guiliani - Big Business friendly Rs
          • Hucklebee - Bible belt Rs

          Thompson was also more of a classical R. Smaller government, strong defense, state rights.

          Even after McCain had claimed the nomination he still only got 75% of the R vote in PA - the Republicans are not united at all. I'm hoping for some very enterta

    • Re:Makes my head hurt (Score:4, Insightful)

      by nurb432 ( 527695 ) on Friday May 23, 2008 @03:06PM (#23521938) Homepage Journal
      Why be confused? All politicians like bigger more complex government.

    • Re: (Score:2)

      by Rolgar ( 556636 )
      The big government/small government really has to do with certain government agencies.

      Military, law enforcement, IRS are all things that the the government has to have to protect the citizens and pay the bills. Both parties are in favor of having all of these things, since anarchy or foreign invasion would result if we didn't have these.

      The big/small government argument has to do with (optional?) social programs such as Social Security, Welfare, Medicare, Medicaid, things that have mostly been added since

      • Re: (Score:2)

        by marxmarv ( 30295 )

        The new drug benefit defies reason since it was passed by the Republicans.
        It's largely a wealth redistribution program that takes money from patients and gives it to big pharma who haven't done anything of value for society that wouldn't have otherwise been done if people could fund basic research instead of big pharma's profits.

        Wealth redistribution upwards = good. Wealth redistribution downwards = bad.
    • Both parties want to control bigger pieces of the pie same pie(even in the very name of our interests).

      The easiest way to wrestle more control of the pie is to make bigger pieces. Just keep watching.

  • Just as banks report interest income to the IRS, and employers report wage income, credit card merchant providers should report credit card income. It's income; you deduct business expenses on your return. Good way to catch tax evaders.

  • I don't get the problem (Score:5, Informative)

    by cliffski ( 65094 ) on Friday May 23, 2008 @02:48PM (#23521758) Homepage
    I'm not american, but don't understand the outrage. surely this is an attempt to 'catch' those people who are making a fortune selling stuff on ebay etc, without ever declaring the income through their business or paying any corp tax.
    As a small businessman who pays every penny of tax as I should, I'm behind any method that helps catch those swine who can undercut me by not paying any tax.
    Since when is it cool to stick up for tax cheats?
    What am I missing?

    • Re: (Score:2, Insightful)

      by lamer01 ( 1097759 )
      I agree 100 percent. This is targeted towards the internet tax cheats. No individual consumer transaction details will be tracked only the total amounts received by the merchant. People on payrolls get their taxes taken out before they even get paid. Why should the small "enterpreneur" get a better treatment?

    • Re: (Score:2)

      by pembo13 ( 770295 )
      Sounds more like jealousy than a valid complaint. (not that there may not be a valid complaint in there)
    • The concern here, since it's aggregate transactions instead of every transaction (don't kid yourself, that day will come), is actually with identity theft as opposed to privacy.

      (I'm distinguishing between the two in the following way, though someone can correct me if other definitions tend to be used: privacy reflects an individual's right to practice what activities he chooses without fear of persecution; identity theft reflects a criminal stealing your SSN and/or other data and building a phony life or ra

      • Re: (Score:2)

        by Electrum ( 94638 )

        many small businesses use their SSN as their tax reporting number rather than an Employer Identification Number, especially for one-person businesses
        Perhaps they should apply for an EIN online [irs.gov]? It is free, and takes about five minutes.
        • They should, but the IRS doesn't say firmly that they should or they shouldn't, so lots of people do. (I think they mostly have you figure out if you NEED one, so a lot of people, following their directions, by default use their SSN.)

  • Underground economy. (Score:3, Insightful)

    by nurb432 ( 527695 ) on Friday May 23, 2008 @03:05PM (#23521922) Homepage Journal
    So when are they going to ban paper money and coinage?

  • Exclusive Sales Tax Destroys IRS Privacy Invasions (Score:3, Interesting)

    by Doc Ruby ( 173196 ) on Friday May 23, 2008 @05:00PM (#23523086) Homepage Journal
    The IRS and its inevitable escalation of privacy invasions is one good reason why we should discard the income tax entirely, in favor of a sales tax. At about 25% (instead of income tax that's 20-35%), our $15 TRILLION economy would produce something over $3T, which (if we stopped pouring money into the Iraq War) would completely pay for even modern bloated budgets, without deficits (and probably with substantial debt paydowns).

    Everything sold retail, with exceptions for a few "necessities", would be charged the 25% sales tax. The necessities would be raw cloth (not finished clothing, unless used and bought from a nonprofit collecting it from donations), raw food (groceries, not restaurants), health insurance, education, telecom (phone, basic cable, basic broadband), local average mass transit expenses, and home expenses on those primary homes costing (rent, mortgage, etc) in the bottom 20% of their Congressional District. Those homes would also have their median power/heat/light utilities exempted. The vendors would be the ones audited by the government, and responsible for ongoing tax collection, not the consumers, so the cost of the tax system would be part of the existing business accounting infrastructure. And violations would cause liens and seizures on the much more easily grabbed businesses.

    Wholesale taxes for registered wholesalers would be a fraction of that 25%, probably closer to 1-5%. Equity sales not resulting in majority ownership transfer would be taxed at a rate of something like 0.01-0.001%, to encourage liquidity.

    Congress could grant extra exemptions for subsidizing commerce it says the US is investing in, like home sales during housing busts or prescription drugs for seniors whose hardship is monitored by the government. But those arbitrary economics engineering projects would be easily pointed out for balancing against new debt when the government proposed deficit spending, rather than charge exempt people their fair share.

    This system would put US taxation on a fair and supportable basis for the first time. Those benefiting most from the system that protects their ability to spend money on what they want would pay the most to keep that system working. Everyone would be encouraged to save, as income and savings aren't taxed. The poorest would have their prices on necessities lowered, but so would everyone else, without the government deciding how to redistribute that money among different people. And the simplicity, fairness and much smaller population (vendors) from whom taxes are actually collected would increase compliance and reduce tax evasion: the vendor won't sell you the goods if you don't pay, and they'll lose their business if their records don't add up.

    But their records will be aggregated, not individual. The government tax authorities won't know a goddamn thing about individuals' private transactions, because they won't need to, and they won't have the raw data.

    The IRS and the income tax will just keep getting worse. Even as it increasingly fails to either manage the economy by "exemption engineering", as we can see from its sketchy results (which usually just covers up subsidies to huge multinational corps), or to even pay the bills, as the ever-booming (especially lately) National Debt proves with more data than any other human endeavor ever measured. Sales tax will do what we want, without doing what we don't want. Let's have it already.

    • I just don't see a flat tax, IRS abolishment, etc ever happening. I would not want to imagine the lobbying effort to quash all talk about it. Think of all the accountants, bookkeepers, H+R Blocks, IRS agents, Tax lawyers of the country that will fight tooth and nail to destroy any common sense approach.

      Paul and Hucklebee both discussed the ideas during the Republican primaries. Sadly those stories didn't get much traction to really get covered. It was a perfect opportunity to have a serious discussion abo

      • Figuring out a good system to move to is different than what it takes to get there. One part of what it takes is figuring out a good system, which we haven't yet.

        But the fact that the #2 and #3 finishers in the Republican presidential primaries each proposed sales tax and IRS abolishment means that in fact the notion has plenty of traction among the people, even if not yet in the corporate mass media. That media doesn't get to say whether we continue the discussion among ourselves, in interactive distribute
  • ...and a couple of reasons come to mind:

    1. I've never assumed transactions on my merchant account were in any way "private."

    2. I report all income from verifiable sources, because the alternative (getting caught) is just not something that is within my risk envelope.

    3. I use a TIN (tax identification number) in lieu of my SSN. TINs are free, so there is no reason for anyone to be using an SSN for their business. In fact, the IRS permits income and expenses from an LLC to be reported under the rules for

  • OK, businesses, if you're taking in credit card income, you need to report it. The cash, if you don't report it, is harder for the government to trace. It's also harder for the IRS to prove a cash income.

    Take the case of Al Capone, the famous gangster who ran Chicago. He was not convicted of racketeering, running prostitutes, murder, and a whole host of other crimes with which he is normally associated. Capone was convicted of tax evasion. But Capone could not ever have been convicted were it not for E.J.

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