THE DEVIL IN THE DETAILS
The reason why I chose to publish my
AutomaticTax proposal in the form of a utility patent is important. A
utility patent application requires very precise description of the
practical functioning of a method or a product. That forced me into very
precise analysis of all the pros and cons without leaving room for
hypothetical theorizing. The main requirement for a utility patent to be
issued is that it must be useful, it must have utility. Theoretical
ruminations exploring feasibility have no place in an application for a
utility patent. That forced me to explore all implementation problems
and to come up with an implementation ready tax reform proposal that
causes the least amount of economic and social disruption in the transition from the various current
taxation schemes to the proposed money transfer based AutomaticTax
system.
TAX REFORM THEORIES
Most tax reform theories are just that, theories. Theories that have not
been assessed with implementation steps in mind. Most of the promotion
of the major alternative tax reform proposals is based on the demerits
of the current methods of taxation rather than the merits and efficacy
of the proposals themselves.
HOW TO "SELL" A TAX REFORM PROPOSAL
Theorizing about tax reform is not the proper approach to induce action
in legislators or the public at large. If enactment into legislation is
the aim of any tax reform proposal, then it must be presented to the
public and the various legislatures in a readily consumable turn-key
package. Tax reform proposals must be "marketed" in the same manner as
any consumable product would be marketed. Consumers hate the idea of
purchasing an unassembled bicycle that comes in a box of parts, or worse
yet, they would not likely tackle the theoretical design plans for a
bicycle where they actually have to make the engineering drawings
themselves, design and make all the component parts and assemble the
final product. Legislators are consumers as well and selling them a
nearly fully assembled bicycle that only needs adjustment to the seat
and handlebars has a far greater chance of success.
THE AutomaticTax PROPOSAL IS READY
The AutomaticTax proposal is ready to "road test" without having to
abandon any of the current forms of taxation. Abandoning current forms
of taxation and abruptly replacing them with a new form of taxation is
virtually impossible without running the risk of very serious
disruptions in the economy. Legislators are very risk averse and few are
willing to stick their neck out. Every decade or so Congress and the
President announce plans for drastic improvements in taxation and
Committees and study Panels are appointed to research and study the
taxation problems. These Committees and Panels in turn will open
forums to obtain input and reform suggestions from the public and
businesses. In the final analysis not much changes and the only
suggestions that seem to be accepted and acted upon by the legislatures
are very low risk proposals such as for example changing the font or
font size on the 1040 tax form or similar courageous moves. Then during
the following decade Congress will add another few hundred or even
thousand pages to the already over-complicated tax code. And that brings
us to this AutomaticTax reform proposal that is in a form that can be
"road tested" with very little cost. That testing can be done without
any kind of risk and with all current taxation methods still in place.
That makes this AutomaticTax a very safe approach to tax reform and that
fact alone should make it very attractive for legislators to act upon
and pass enabling legislation to "test ride" the AutomaticTax.
HOW TO TEST THE AutomaticTax
The AutomaticTax is collected by banks and it can be tested and
fully implemented within small or large government jurisdictions one at
a time or many or all at the same time. The banks doing the tax
collection will get well compensated for the tax collection effort they
will be doing on behalf of the various levels of government that have
nexus to the collected tax revenue. In a dry-run test the tax percentage
to be collected could be set at a hypothetical 1% and the actual
collection need not take place, but the total of the 1% hypothetical tax
that would have been collected can be quantified. From that hypothetical
AutomaticTax test run the system can be evaluated for its effectiveness
and it can also be calculated what actual percentage rate should be used
to meet or exceed the combined revenue needed by the jurisdictions
having nexus to the AutomaticTax to replace or exceed the revenue
presently generated by the various current taxation systems.
IMPLEMENTING THE AutomaticTax
After the AutomaticTax has been tested and found to be effective it can
be fully implemented. The current several methods of taxation have
created millions of jobs through direct employment by the 30,000 or so
taxing jurisdictions in their administrative, collection and audit
departments, and through indirect employment by thousands of private
sector companies that render services associated with taxation. When all
these labor-intensive taxation methods are replaced with the very
efficient UniversaTax the millions of people now employed because of the
current methods of taxation would lose their jobs. All these millions of
people must be compensated and the AutomaticTax must be phased in very
gradually over a period of several years to give all these people ample
compensation during the transition period into new employment or into
retirement. The provision of safeguarding income for the millions of
affected taxation related employees during a prolonged transition period
to the AutomaticTax is vital not only to those employees but is
mandatory to protect the total economy from a severe economic crash
resulting from the massive unemployment the elimination of all those
jobs would create.
AN EXAMPLE OF PHASED IMPLEMENTATION
The safeguarding of the incomes of the millions of tax related employees
that would be losing their employment is certainly not a purely
altruistic action but rather a wise measure to prevent a serious
temporary decline in the general national economy. The example I am
proposing here is certainly not binding and many alternate methods can
be employed based on underlying conditions. An example:
If the test runs for the AutomaticTax have determined that the
AutomaticTax should be 5% then the tax can be gradually implemented over
a period of 4 or 5 years in the following sequence:
1. Start the first year with 1% AutomaticTax and reduce the tax
rates of all old forms of taxation so that they will yield less revenue
in an amount equal to that raised by the 1% AutomaticTax. At the same
time offer employees of the various taxing agencies lump-sum cash
incentives to leave their employment. People employed by the private
sector tax related businesses can also be offered incentives by
government funded programs to leave their employment. Retiring employees
will not be replaced with new hires.
2. In the second year of transitions to AutomaticTax the tax rate
can be increased to 2% and the other taxes can be reduced again to
decrease their revenue by approximately the same amount of money gained
from the additional increase to 2% of the AutomaticTax. Employment rolls
will be reduced additionally by incentives and attrition.
3. By the third year enough people may have left the employ of some
of the smaller tax agencies so that these taxation departments can be
totally eliminated and the agencies closed down while the AutomaticTax
can be increased by another 1% plus a percentage that will cover the
remaining loss of revenue from the closed down taxation departments. The
IRS will lose employees at a gradual rate as well and can gradually
reduce the number of taxpayers that need to file tax returns starting
with those with the lowest gross incomes.
4. By the fourth year the AutomaticTax can be increased to its full
5% and all other taxes can be stopped while all remaining tax related
employees in the employ of government will be offered other government
jobs and those jobs will be gradually eliminated as well by attrition in
those government departments that have temporarely absorbed and
supported the remaining tax related employees that needed to be
financially supported. Many tax related private sector companies will
may have closed their doors by then or will have reduced employment from
downsizing their operations to non-tax related services.
Many different methods for financial support of the displaced tax
related employees may in actuality be used in dealing with the
transition problems created from switching from the nonsense tax systems
we currently suffer under to the new elegant AutomaticTax solution.
ECONOMIC IMPACT FROM CHANGES
Rarely is economic impact considered by governments when they blithely
change tax provisions or provisions in other laws and regulations. The
mere fact that a AutomaticTax will save billions of dollars does not
make it an economic success if you totally ignore the matter of large
scale unemployment that will most certainly take place as a result of
AutomaticTax implementation. In fact I find the addressing of such
problems prior to implementation of the AutomaticTax vital to its
initial success and its yielding the predicted benefits not only to the
many taxpayers but also to the taxation related employees that will be
immediately negatively affected as soon as the AutomaticTax is
implemented because they will be out of a job. There is absolutely
nothing wrong with providing a government financed complete financial
safety-net for as long as is needed to help the taxation related
employees and the taxation related businesses make a smooth transition
into jobs that are hopefully more productive and businesses that produce
goods and services that are really desired by consumers. Even if the new
jobs and businesses are not very productive or desired by consumers but
they provide employment for those who otherwise would be unemployed, the
economy and all the governed will be vastly better off than with the
grotesque taxation system we will be getting rid of for good. Part of
the legislation for implementation of the AutomaticTax must incorporate
immediate government funding that may in the first few years vastly
exceed the eventual yearly government savings from this AutomaticTax.com
that is very much less expensive in collection costs and administration
and enforcement than the current messy system of taxation. During the
few years of government financed transition support all workers and
businesses are gradually making the transition and the cost of the
support will gradually diminish over the years and eventually totally
fade out. That is when the total savings to the various governments will
finally be realized. The savings to the private sector and the millions
of current taxpayers will be IMMEDIATE when the AutomaticTax.com has
been fully implemented.
ADDITIONAL IMPLEMENTATION ASPECTS
I will add additional implementation aspects as they become apparent. A
change to a new system of taxation is not a minor matter, because many
laws and regulations are based on the old system. It requires careful
analysis too consider all transition related preparations to make a
transition as smooth as possible. It is a large undertaking that is well
worth the effort. We can no longer stick with that shameful monstrosity
created by some very dumb experts and congress with plenty of persuasion
by lobbyists.