AutomaticTax or 2020Tax
This is an expression of Interest to replace all current Tax Systems in India with a combined single and simple AutomaticTax system.
A most excellent tax replacement proposal that sounds too good to be true. Yet it is absolutely brilliant. There is a lot of reading to be done on this website and if your attentionspan is limited I would recommend you start with "Q & A" and after that you should read "10 Tax Principles".
AutomaticTax is not a tax system proposal that advocates lowering the amounts of taxes to be collected. AutomaticTax only concerns itself with the collection process and the efficiency thereof. AutomaticTax recognizes the fact that increased amounts of revenue may be needed in the future when larger public infrastructure projects need funding such as highways, highspeed rail, urban renewal etc. The AutomaticTax system is focused on the maximum efficiency of revenue collection and the least cost and least personal and corporate privacy intrusion and maximum liberty for free enterprise to operate and prosper. It is also a system of tax revenue collection that eliminates 99% of all the tax codes and that in turn reduces corruption to a practical minimum. The countries with the smallest number of laws and regulations will have very much less corruption because laws and taxcodes are the largest generators of corruption in any country.
THE PURPOSE OF THIS WEBSITE
The primary purpose of this website is to inform Indian Tax Authorities, Members of the Indian Government, the Indian Parliament and Indian Business leaders that there exists a most excellent proposal for tax reform/replacement that most likely far surpasses their highest expectations for any method of tax reform. The Income Tax Department, Ministry of Finance, Government of India is currently (June/July 2006) requesting Expressions of Interest for Reengineering of the Income Tax Department. This 2020Tax proposal is a total replacement of all current tax systems at all levels of Government in India. This proposal is not what the India Ministry of Finance is requesting, but it is a unique opportunity for India to consider this brilliant tax solution. The parameters for submissions of Expressions of Interest as written by the Indian Income Tax Department will exclude from consideration this 2020Tax proposal entirely and that would mean that India misses a great opportunity for revolutionizing its whole tax collection systems at all levels of Government.
The basic idea of this 2020Tax proposal is to collect revenue for all levels of government combined with a single tax at the lowest cost of collection and with the greatest simplicity and convenience for the tax paying public and businesses and corporations as well. No accounting needed, no filing of tax forms, no audits. The total savings of cost and effort will save the total Indian economy BILLIONS OF DOLLARS per year.
2020Tax is a very low percentage excise tax on all monetary transactions. The tax collection is done by the banking system.
In its simplest explanation 2020Tax is a tax that is collected by directly deducting 5% from all funds deposited into bank accounts and from checks presented for cash payout. The 5% rate is proposed for the United States where only 3.9% is needed to collect an equal total revenue that is currently collected through all tax jurisdictions at all levels of Government. The extra 1.1% is proposed to pay off the National Debt and all debt at lower levels of Government jurisdictions. The tax percentage may differ for different countries according to need. The taxes collected in this manner through the banking system are transferred to a government revenue distribution department at State level and from there the funds are distributed to the financial departments of governments at the various levels of jurisdiction such as Federal, State, County/Regional and Local (City, Town, Community). A detailed and more precise explanation of the complete proposed tax system is available here in 214 paragraphs of text and 4 flowcharts.
Summary of what 2020Tax accomplishes:
1. 2020Tax combines all taxes at all levels of Government (Federal, States, Regional, Municipal) into a single simple tax collection process.
2. 2020Tax eliminates all record keeping for individuals, businesses and organizations.
3. Eliminates preparation and filing of tax forms.
4. Requires no audits.
5. Provides for automatic collection of an extremely broad tax at a very low tax rate. The rate needed for the United States is under 5% (between 3.8% to 3.9%). The proposed rate for the United States is 5% so that there will be excess revenue with which to pay off the National Debt and all government debt at lower levels of government as well. Governments should never create debt with which they burden future generations.
6. This 2020Tax requires minimal enforcement because it is collected electronically. Only pure cash currency transactions escape the 2020Tax and the total volume of cash transactions will drop sharply from its current level because the incentive to escape taxation is small compared to cash transactions under current forms of taxation.
7. 2020Tax can be fully tested with a 0.1% tax rate for a 12 months period before full incremental implementation would be voted into law by legislatures. This way the system can be tested for its suitability and also the exact percentage rate needed for sufficient revenue collection can be nearly presicely established.
8. 2020Tax largely prevents tax evasion and tax avoidance.
9. 2020Tax will be incrementially implemented during a period of maximum 20 years to avoid sudden mass unemployment in taxation related "industries". Slow gradual implementation will prevent large scale economic disruptions and otherwise possible economic depression during and after transition from any current system to the 2020Tax system. Many, if not all, other tax reform proposals do not take the economic difficulties during transition into account.
10. 2020Tax will liberate businesses and individuals from tax imposed workload and privacy intrusion. It will lower or eliminate tax imposed constraints on free enterprise that currently hamper businesses in their financial and operational decision making processes.
AN ADVERTISEMENT IN "The Economist"
I encountered an advertisement in "The Economist" inviting interested consultants to propose ideas for a major revamp of the Indian Income Tax System. The advertisement reads as follows: "Global Notice inviting Expressions of Interest (EOI) for Consultancy Services for Business Process Reengeneering (BPR) of the Income Tax Department". Not unlike most tax reform efforts undertaken by governments around the Globe, this Indian solicitation for tax reform consultants is most likely doomed to fail because it deliberately invites "experts" on taxation and excludes all others. The result will be that the few extremely large international accounting firms and international tax law offices will offer their services through "experts" and University Professors on economics and taxation that are on the payroll or are paid for by these accounting houses. The advice and consultation given to governments around the Globe almost always leads to tax complication rather than to tax simplification, thereby giving these international accounting houses vastly more work and greater earnings (which yearly earnings currently run already into the 11 figure dollar amounts).
A SUPERIOR PROPOSAL
The 2020Tax proposal is a Tax Replacement and not a Tax Reform. The 2020Tax system is universally applicable to any Country in the World. This proposal is totally excluded from consideration by the "Minimum Eligibility Criteria" and the "Requirements for Expression of Interest" as written by a team within the "Government of India Income Tax Department, Ministry of Finance". The Tax Department wrote the invitation for consultants to modernize its current Income Tax system in such a way that only the very large international accounting firms would be able to offer their services. These large accounting firms have little interest in streamlining taxation systems in any country. It would be contrary to their own interests. These large accounting houses would lose massive amounts of billing hours when current systems of taxation were to be replaced by 2020Tax. That is why more often than not complication results when governments are consulted about tax simplification and tax reform by "experts" that are associated with or paid for by large international accounting firms or law firms that specialize in matters of taxation. It is like asking the fox to guard the chickens.
A SMOOTH TRANSITION TO THE NEW TAX SYSTEM
Any tax reform or tax replacement must be able to be transitioned to in a manner that will prevent economic turmoil. This most excellent 2020Tax reform/replacement proposal can be slowly transitioned to over a period of 5 to 20 years so that the transition from any current system of taxation can be made without major economic disruptions or negative economic impact during the transition process.
INDIA, DON'T MISS OUT ON THIS OPPORTUNITY
The expressed desire of the Indian Ministry of Finance to reform its Income Tax System creates a window of opportunity to introduce a system of taxation that will completely eliminate the dreadful Income Tax with this most brilliant 2020Tax system of revenue collection. It would make India the undisputed leader and shining example for excellence in taxation for the rest of the World to follow its example. It will also contribute immensely to the progress of business and the economy in India by unburdening the Indian economy and businesses from the shackles of taxation that all other countries currently suffer under (specially the United States with its 65,000 pages of income tax code and most burdensome and intrusive tax collection systems at all lower levels of government).
INCOME TAX IS A TERRIBLE MISTAKE
Streamlining Income Tax is a "Fools-errant" because Income Tax in itself is a major mistake that should have never been chosen as a method for Government revenue creation. Income Tax as compared to 2020Tax is as a horse and buggy compared to a jet airplane. Through the mistake of "Income Tax" as a method of revenue collection the taxation system has become a political "football" that gets kicked around to achieve desired social outcomes and it is used as an economic tool by special interests that promote their aims and goals of special tax treatment for themselves and are represented and aided in their purposes by armies of lobbyists that work the hallways of legislative bodies all over the World. A tax-break here and a tax penalty there and before you know it you have an abomination like the 65,000 page income tax code the United States suffers under.
MANY POTENTIAL DETRACTORS
As with anything that is excellent and far ahead of its time, 2020Tax will meet with a lot of organized resistance and opposition from a large number of "experts" and the special interest groups they represent. All these "experts" would like to preserve as much as possible the Status-Quo by protecting as much of the cumbersome and labor intensive current Indian system of taxation. There might be officials in the Indian Tax Department Ministry of Finance that would prefer to protect a system that employs 60,000 people and creates countless other jobs in the private sector and favors many special interest groups that very likely pay for all the lobbyists that seek to influence many members within the Indian Government and the Rajya Sabha and Lok Sabha (the Indian Parliament) to maintain the special tax provisions they currently enjoy. Experts in all branches of knowledge are afterall the www.GuardiansOfTheStatusQuo.com
COURAGE AND IMAGINATION
It takes courage and the ability to think "outside the box" to recognize excellence and give it a chance. I certainly hope for India that this 2020Tax reform proposal will meet with the required kind of courage, by people in power in India, to bring it about.
THIS TAX SYSTEM WAS PROPOSED IN WASHINGTON D.C.
This tax system was first disclosed to the "President's Advisory Panel on Federal Tax Reform" during a public hearing by that Panel on May 11th and May 12th, 2005. The "Advisory Panel" saw only fit to recommend to the President some minor tinkering with the current 65,000 page Federal Income Tax System. It was a waste of 2 days of my time and of the time of all others that attended the public hearings. It was not surprising that the 9 member Advisory Panel had absolutely no interest in any tax system that would completely replace a system that stifles the United States economy and creates direct and indirect employment for 12% to 16% of the US working population. The "Advisory Panel" was all ears whenever representatives or "experts" associated with the large international accounting houses took the podium to address the Panel and they virtually went asleep whenever a tax reform was being presented that would drastically simplify the current shamefully complicated tax collection system. They (the members of the panel) are to be ashamed to have proposed to the USA President only the minutest tinkering with the current system. It is to be hoped that their Indian counterparts have a bit more courage and intelligence than to settle for similar mediocrity.
READ THE DETAILS AND QUESTIONS & ANSWERS
To fully appreciate the brilliance and simplicity of this 2020Tax system, it is recommended to first read "10 Tax Principles". Then read all other particulars that were written with the United States tax requirements in mind but are fully implementable in any other country (including India of course).