PAPERLESS PEOPLE & GOVERNMENT FRIENDLY REVENUE COLLECTION
Aims and Objects
“Tax simplification remains everyone’s
favorite orphan.” Fred
Goldberg
“All of us involved in the tax
system--Congress, the executive branch, practitioners and taxpayers proclaim
our affection for this child of our dreams, but few are willing to adopt her as
our own.” Unknown
“The most difficult thing to
understand in this world is the Income Tax Laws.” Albert Einstein.
Every year Millions of US citizens dread the prospect of
approaching Deadline for Filing of Returns.
Tax Laws and especially Income
Tax have become very complex and not easy to be simplified. Therefore, instead
of trying to simplify these Laws, make a complete departure from the past. Taking advantage of the present tremendously
improved TECHNOLOGY and the very
efficient infrastructure BANKITNG
INDUSTRY try and evolve an
altogether ALL COMPREHENSIVE SINGLE UNITARY
SYSTEM. It should be easy to
understand, easy to administer, and cost effective. It should involve least paper work and human
intervention. It should aim at WEALTH-GENERATION and not WEALTH TAXATION. It should ensure greater wealth in the hands
of the INDIVIDUALS and greater REVENUES for the Governments. That is it should be a WIN-WIN SITUATION both
for the CITIZENS and the STATE.
The New Approach
(Please post your comments and let me know if I am totally wrong and why)
We WITHDRAW
money/sums from the banks to be spent for ones own PERSONAL BENEFIT
for obtaining of goods and services.
In other words, TOTAL BANK WITHDRAWALS are indicative of
aggregate PERSONAL BENEFITS received by the individuals/consumers.
Goods and
Services are provided by the SOCIETY.
Thus we have
before us two distinct groups.
(a)
INDIVIDUALS
who receive BENEFITS by way of goods/services from the Society
are CONSUMERS.
(b)
SOCIETY
which provides goods/services are SERVICE PROVIDERS.
That is at
once we are both CONSUMERS and SERVICE PROVIDERS/SOCIETY.
Hereafter, for the sake of brevity we
shall use the term “CONSUMERS” to refer to individual consumers (beneficiaries)
AND “SOCIETY” to refer to Service Providers.
It is
logical that “CONSUMERS”- (individual beneficiaries) are expected
to contribute for the general benefit of the “SOCIETY” for the
services received. This payment is what we call “Tax/Revenue.
Question also
arises how much to contribute by way of TAX, and how to collect them.
Answer is simple:
In proportion to the BENEFIT availed of.
If one has availed of less BENEFIT, he/she pays less; higher the BENEFIT
higher one is expected to pay.
Also there
are two types of NEEDS. Up to a
particular level this need is normal; beyond that limit it would amount
to LUXURY. Therefore, there
should be GRADED TAXATION.
Since BANK
WITHDRAWALS represent the BENEFIT availed of, introduce a graded
deduction at the WITHDRAWAL stage.
Now straight to the proposal
Total Direct Revenue (guestimated)
Income Tax 2.1 trillion
Social Insurance Taxes 1.1 trillion
Ad-valorem Taxes 1.1 trillion
Fees and Charges 0.5 trillion
Business and other Revenue 0.8 trillion
TOTAL 5.6
trillion
Present annual withdrawals from the US
Banks 100 trillion
Present estimated Revenue collection 6 trillion
Add Revenues collection by individual
States 4
trillion
AND
Present annual WITHDRAWALS from the US
Banks 100 trillion
Therefore, we have to raise around 10
trillion as Taxes under the proposed dispensation.
Introduce a “Tax Deducted at Source
(TDS) at the WITHDRAWAL stage.
A mere 10% TDS against withdrawal of
100 trillion should give a revenue yield of 10 trillion.
However, perhaps
the Graded TDS could be somewhat on the following lines.
5% upto a
certain level “A” of WITHDRAWALS;
6% for
certain levels between “A” and “B”
7% for
certain levels between “B” and “C”
8% for
certain levels between “C” and “D”
And so on may
be upto 15 or 20%
These levels
and percentage are best left to the “Group of Thinkers/Experts”
The revenue so generated centrally can be automatically
apportioned between Federal Government and others by an agreed formula—to be
reviewed and revised periodically. If need be State Governments may also can
have additional Tax Laws in their respective jurisdiction.
To meet emergency situation or calamities, even a
temporary 0.1% increase in TDS would be sufficient to tide over the
difficulties.
Secondly, there should be no EXEMPTION
whatsoever. CONSUMERS should be willing
to pay Tax on every single Cent/Dollar spent by them.
Of course in
extreme individual/or group cases EXEMPTION can be thought of to be
given by the Government under its normal Residuary Powers.
We would
like to sum up “CONSUMERS are expected to pay a percentage of PERSONAL
BENEFIT (represented by BANK WITHDRAWALS) for the GENERAL BENEFIT OF THE
SOCIETY.
The
innumerable advantages, if a Tax Legislation is formulated and implemented,
that would accrue to everyone, are left to the imagination of the Senators,
Social Thinkers and others.
If a
comprehensive simple Taxation System is evolved and formulated by a
group of competent Economists, Thinkers, Rule Makers and Others, it should
bring immense benefits to the public as also the Governments.
The
innumerable benefits are left to the imagination of everyone. These are too many and numerous to be
enumerated.
All that we
would like to say that this regime would provide an environment wherein INDIVIDUALS
will have full unhindered freedom and scope to CONTRIBUTE to the
nation building effort—WEALTH GENERATION—activities as one can devote
one’s attention entirely to the chosen profession. The REVENUE GENERATION would be in an
auto-mode. Only if anyone tries to
circumvent it by foul means, will he/she be visited by the Revenue sleuths—Rule
by exception.
We are too
small persons to attempt this. Even we
are not sure how far we have been able to put forth our views in a readable or
intelligible manner. We are extremely
ordinary persons having no claim as professional writers or any erudition.
Before we
close, we would like to emphasize that the large competent personnel of IRS can
concentrate their attention on possible WHITE CRIMES. An elite force can be carved out to detect and enquire
into serious financial irregularities. After all in any society there
are some misguided elements which would try to violate the laws.
IRS should be able to detect them and thwart such a tendency.
US is facing
multiple problems both within and without.
Services of surplus IRS staff, if any, can be fruitfully used to meet
them, if necessary by reorientation training.
We have been
impelled to write the above piece as we sincerely believe that it might (given
the blessings of the Almighty) be pointer towards the goal towards which the
Nation should march. Perhaps (it is a big PERHAPS) it may serve as a
trail-blazers for other countries. Time can only tell whether this wish is met
or not.
We dedicate
this to the USA hoping that something good may arise. The rest is in the hands of the God.
We end our
effort saying “HELP US GOD-MAKE US WORTHY OF BLESSINGS AND SHOW US THE WAY!!!”
This suggestion is for the consideration of the rule makers, thinkers and social scientists. This brief note is intended only as a “Food for Thought”.
We believe that at times the simplest suggestion could prove to be the most potent and ideal solution to the vexed problem.
- Following is a suggestion for the consideration of the rule makers and social scientists. What follows is intended as a “food-for-thought.”
- “At times the simplest suggestion could be the most potent solution to the vexed problem.”
AIM
· Government should provide necessary Fund for the Scheme.
· It should act as a link between the citizens and the hospitals and be a catalyst/facilitator to give fillip to the Scheme.
· The role of government would be strictly restricted to laying down a broad guideline so that medical service are made available at reasonable rates. At best government is a link between the individual beneficiary and the medical service providers.
· The Scheme should be able to attract increasing number of Healthcare personnels.
· The individual should have the freedom to select any practitioner or medical institutions of one’s choice for the treatment. Should also be free to switch over to other practitioner or institution.
· The individual need not be required to pay even a single cent for the services, including for medicines, ambulance etcetera.
- Following is a suggestion for the consideration of the rule makers and social scientists. What follows is intended as a “food-for-thought.”
- “At times the simplest suggestion could be the most potent solution to the vexed problem.”
Fund requirement
Population … … … … 300 million
Annual premium (assumed) … … $10000 per annum*
Total annual premium to be generated $3 trillion
*This figure needs to be accurately determined by qualified and competent actuaries.
The arguments advanced under the “Revenue Generation” above applies
mutatis mutandis here also. Therefore we refrain from any elaboration
.
CONSUMERS owe to SOCIETY to provide for medical care for the services received from the SOCIETY from womb to the tomb.
An additional 3% TDS should be able to generate annually 3 trillion to meet the cost of the proposed Medicare. Thus the contribution from the INDIVIDUAL would be in proportion to the BENEFIT availed by way of services from the SOCIETY.
We would proceed to outline/describe the Scheme, in brief as under.
- The Scheme can be christened as “Social Security Scheme” – SSS in short.
- The Authority to administer this Scheme would be known as “Social Security Authority” – SSA in short.
- The existing Social Security Card should serve as ID. Ideally this should also contain details like photographs, family details etc.
- The SSA would recognize Hospitals, Institutions, clinics, Authorized Medical Attendants, Para-Medical staff, Medicine dispensing outlets, Ambulance providers and the allied service providers, all over the nation.
- SSA would also lay down reasonable remunerative tariffs for the services and medicines, from time to time. This would ensure that one uniform rate prevails throughout the country.
- The beneficiary would present oneself before the Doctor/Institution and others for treatment supported by the ID.
- The beneficiary would not be required to pay any amount for the medicine or any treatment/services.
- The Doctor/Hospital/Institution and others rendering services would keep a record of the services rendered and would get reimbursement from the SSA, say once a month.
- In order to minimize the possible misuse of this Scheme, SSA can have WATCH DOG TEAMS at various places/areas. These teams would serve as the eyes and ears of the SSA.
- This Scheme could be considered for being extended to the visitors to this country against a flat rate depending on the duration of stay and age. Additionally since they would be spending money during their stay in the country, contributions from them also would be coming’ through Bank withdrawals; no special levy is being suggested here.
In short, the Scheme envisages that at the rate of 10000 dollars per citizen per annum, we would be generating annually $3 trillion to meet the cost of health care. This sum can be collected by levying TDS of 3% against withdrawals of sums from the Banks. The Authority SSA recognizes series of hospitals/clinics/authorized medical attendants. Citizens can have medical treatment at any place of his choice. Hospital/clinic/AMA will get reimbursement periodically. It will be a classic case of government and private agencies coming together to render medical service to the citizens wherein citizen would not be required to pay a single cent for treatment.
Those who do not wish to avail of this SCHEME are always free to seek other avenues.
On the death or total disability of the Beneficiary, a decent sum can be thought of being paid to the nominees or the beneficiary, as the case may be. We are not going into the details. It is just a wild suggestion.
This brief Paper is meant as a “Food for Thought” to those who has in mind the welfare of the people of this great nation. We trust it would receive the consideration it deserves.
For obvious reasons we have not elaborated on this SCHEME in any length.
