Throughout the years, the IRS has been the butt of many jokes. The Internal Revenue Service (IRS) has become associated with negative connotations as many people feel that their tax dollars are wasted on a government that frequently overextends itself and its budget. Not only has the IRS become associated with negative thoughts, but the way in which the IRS seeks to collect taxes has become so difficult that many Americans are frustrated with having to fill out lengthy and complicated forms. The answer to this mounting problem could come in the form of a national flat tax.

How It Works

The flat tax would place a percentage tax (some propose fifteen percent) on all taxable property or services in the United States. This would eliminate the need for the IRS and require that no other agency be created to takes its place. Income tax would be a thing of the past as well as all estate, gift, and non-trust fund taxes. Therefore, the money that the American people made would not be taxed until they spent it. The tax would be collected during the payment for goods or services. There would be no more tax forms to fill out and taxes would cease to be withheld from paychecks.

Charitable contributions would not be taxed and any capital gains or income derived from investments would be tax free, provided that they were reinvested. In essence, people would pay their federal taxes at the store when they bought a pack of bubble gum or at the car dealership when they purchased a new car. Businesses would not have to pay taxes. They would simply collect them. This would reduce the cost of having to file tax information, eliminate taxation penalties, and eliminate complex and confusing forms.

Highly Unlikely

There are two things that make it highly unlikely that the government would convert to a flat tax. First, two thirds of the House and Senate, and three fourths of the states would have to vote to repeal the 16th Amendment which created the Income Tax. Second, people are likely to be opposed to the flat tax because it is so spread out that it would be hard for citizens to determine how much of their money is going to the government. They would have to keep records of everything that they bought for the entire year in order to do the required calculations. Many experts feel that while people do not like seeing the large lump sum figure that they owe the government, people draw a certain sense of comfort from knowing the exact amount that they are paying.