Saturday, March 28, 2009

Income Tax code at a breaking point says futurist


Here are some possible triggers:

1. Political Trigger 1: During the confirmation process, several Obama political appointees were either dropped from consideration or had their reputation tarnished because of past tax issues. Tax problems have become common enough that the government will be compelled to make changes, if simply to avoid the routine political embarrassment. Obama could not be blamed if some future flare that sends him out of the White House becomes the catalyst for a special commission tasked to bring about change.

2. Political Trigger 2: With plans for a national health care system and funding for education reform hanging on the government’s ability to pay for them, a new tax system emerges from these massive efforts to pay for these programs.

3. Technology Trigger: A new automated tax structure is created that makes tax collection seamless and invisible to the general public.

4. Individual State Trigger: Currently seven states in the U.S. do not have state income tax. Some states like Wyoming and Alaska have huge income streams from their natural resources. Other states are supported by higher property taxes and other tax levies. A modified individual state tax system could become the model for the new national system.

5. Budget Crisis Trigger: Because of the extreme debt load created by recent stimulus packages, the government has to scrape for more money. Ultimately, government is forced to rethink the tax system to prevent national insolvency.

6. Wealthy Individual Trigger: A wealthy individual files a well-publicized lawsuit against the IRS. The plaintiff’s lawyers note that their client, who is of far-above-average intelligence and armed with extraordinary resources, is simply no match for the complexity of the tax code and cannot be reasonably expected to comply with the law by completing a 1040. The lawsuit places all concerned with the administration of the IRS in the indefensible position of having to explain the tax code. Good luck on that one, IRS. The day is won with unassailable logic: inability to determine what to pay out in taxes is persuasive and the U.S. Supreme Court hands down a decision to abolish the system.

7. Class Action Trigger: A group of some 200 of the largest tax payers file a class action lawsuit against the U.S. government for a number of competitive impairment issues. The lawsuit triggers a national debate between politicians and the wealthiest individuals in the country. The government settles out of court, agreeing to throw out the entire system and start over.

8. Federal Reserve Recommendation: Ben Bernanke issues a strong recommendation to replace the existing tax code based on what the Federal Reserve Board views as broad ranging problems inside the national monetary system. The too-big to fail argument is ushered to the fore on behalf of the monetary system. End of story.