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Tax Simplification for Businesses

June 13, 2014 Leave a comment

There are numerous policy proposals that would contribute to a more simplified and efficient tax regime in the United States. While individual states and jurisdictions cherish their individual taxing authority, universal policies can be championed on a national level that would reduce the burden on taxpayers and more importantly the businesses that are the engines of the democracy.

 

a)      Sales Tax

  • There are 9,998 sales tax jurisdictions in US (over 5,000 in just 5 states: TX, MO, IA, AL, OK)
  • In 2011, there were more than 1,000 tax law and/or rate changes in these jurisdictions causing additional compliance and regulatory burden
  • There is a tremendous burden on businesses to track sales of goods and services, remit taxes appropriately, and face onerous penalties for inadvertent failure to comply; and differing tax bases and definitions further increasing complexity.

 

Adopting a uniform national sales tax partnership (I.e., one rate, one return administered by the federal government with most of revenues sent back to states to pay for schools, roads, etc.) between the federal government and the states is a win-win for all taxpayers by reducing complexity for businesses, increasing business compliance, increasing understanding and predictability for consumers, and equitable sharing of tax dollars across the nation. In addition, the costs of administration can be handled by a central authority (which should be more efficient) rather than burdening states with the costs of administering these taxes separately. If legislative negotiations are required, each state could provide a clearinghouse for these transactions under a uniform set of regulations.

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