Revision of the Internal Revenue Service and System of Taxation

by Orion Karl Daley


Our Patriotic Duty: Second to dying for your country, the most patriotic duty we have is paying taxes. Currently for most workers, two (2) of every 5 days that we work currently are to support our federal government; where a 3rd day can be considered toward state, and city, and sales taxes. For every 40 hours that we get to work, 16 of those hours we are entitled to use to support our families, pay fixed costs, apply to savings, and invest for the long term; or if required to pay back taxes.

Things to Consider: When and if you having to visit the IRS in a major city, it is easily to take note that the majority of tax payers visiting are the working poor, and not the working rich. The question is, the way Congress was oblivious to the conditions of Walter Reed Army Hospital, are they also aware of the working poor trying to find ways to pay their taxes ?

Are we also aware that the tax breaks for the richest 2% of Americans represent a population that owns about 40% of the worlds assets, and that they have not contributed to bettering the economy for all. Has it also been considered that if this 2% did not have their tax break, that others, such as the working and the working poor could keep more of their hard earned income to better and improve their lives, it not just to stay afloat ?

Further, lets consider is the richest 2% did not have a tax cut, what that could do for our economy, if in fact conditions were not alleviated for others ?

In all cases it becomes ever more challenging when the value of the US dollar decreases, and when there is no efficiency nor effectiveness in the management of tax collection. Regardless if the richest put their wealth in stronger currencies to protect themselves, and some day someone promises you that taxes can be lowered, they can't be without fixing a broken tax collection system. Regardless if we believe that we are over taxed or not, what is wrong is in allowing the reliance on a broken system that is ultimately intended to serve the people.

Further taxes for wage earners must itself be examined as constitutional and what fair wage tax if any should be called for.

Efficiency and Effectiveness of Tax Collection is in question when considering the huge Tax Gaps, questionable schedules, cuts, and the overhead of the Internal Revenue Service in of itself in dealing with their responsibilities.
It is my promise to pursue fare and effective tax collection that is cost effective in aiding our economy. In assuming tax is tax, examine the current cost effectiveness, or cost of its collection:
What incentive does the IRS employee have for the efficiency and effectiveness in doing their job when the processes in place are not efficient nor effective ?
It is easier to opt out in order to get the desk cleared which does a disservice to both the IRS in its stated purpose and to the tax payer who it is ultimately serving.
What return on cost does the IRS provide in having broken processes to manage with ?
Any operation, that is broken in procedures and processes ultimately wastes their budgets as opposed to effectively using them to serve that operation.
How do you fix broken processes when the Tax system achieves nothing further than painting itself into a corner in compounded complexities ?
Functional Design of anything must be top down, or there are functional bugs that are inherent in the outcome of our expectations.
If elected President in 2008, it will my commitment to help the Treasury Department and IRS to stream line costs based on the following:
Tax Cuts and Questionable Schedules can be like free falling, where the experience is similar to the absence of gravity until we hit the solid ground of our debt's impact. The dollars that are saved by the top 2% in drastic cuts ultimately become of less value. Perhaps, those in the top 2% are smart enough to offset such a loss in their investment management, but ultimately they too are subject the the Nations level of debt.
  • Tax Schedules and cuts can be graduated for 'All' based on the level of Solvency vs. Debt Burden that the Nation has. It is then; no longer necessary to say 'Read Me Lips' as just lip service; and such policy in its flexibility allows for financial planning top down from the government to the people it serves.

  • To offset the expectation of the erroneous Tax Gap collection benefit, there is upwards of $15 billion in capital gains that can pay for the operation and use of the IRS itself for over a year.
Process that lead to no where, or without fair and remedied schedule of conclusion does nothing but (a)- cost the IRS's budget, and (b) - compounds the challenge of the Tax Payer in dealing with their escalating tax burden.

This can even motivate predatory lending practices to exploit the opportunity of the tax payer. This in turn just further burdens the tax payer in paying future taxes. The IRS must serve the people in order to serve the government cost effectively.
  • Accounting serves value, but its value is truly realized with given forethought and hindsight. Good accounting practices deal with balancing ledgers, where the cost of money itself is accounted for. Interest and penalties serve a purpose in the Tax System, but without scheduled and fair conclusion for remedy, what was once perhaps $1,000.00 owed can become easily $10,000.00 owed.
    • Multiply this by just 40,000 taxpayers and the IRS has an unmanageable level of $400,000,000 of wishful thinking but unobtainable Tax Revenue to try to collect. That is instead an actual $40,000,000 with reasonable interest collect. 
  • Interest and Fees is an unrealistic venue when considering the related labor and processing costs in not collecting what looks good on the books.
  • For both the IRS, and the Tax Payer, it would be best to get the tax paid at $1,000.00 than having to deal with un-resolvable and unrealistic interests, charges and fees and related costs in the wishful thinking of $10,000 * 40,000 taxpayers.
    • Both the IRS and the Tax Payer must work together to seek  remedies where the IRS  can obtain what is really due in a timely manner with out disenfranchising the tax payer from being also  future viable Tax Payer.
    • Closure is in the IRS structuring the Debt early on so that it can be paid through structured loans to the tax payer, and default where there is no possibility in collecting.
  • Reduces the over all collection costs and time frames for closure
    • provides for a more accurate budget needed for the IRS.
IRS Agents can do their work when information is made available to them. Much of the time, information can already be on file, but not accessible to the Agent. The Agent under such circumstances  will put the onus on the Tax Payer for reproducing this, as well as other laundry list items of information within a period of time that serves the convenience of the Agents Work Load.
  • By Providing
    • The right Information Access Tools the Agent's Workload becomes lighter for the same given case load.
    • The Tax Payer has more bandwidth to meet the Agents Time frame for the balance of a requested Laundry List
    • Case Tracking can be established for historical audits on case performance closure, as well as case inheritance.
    • Case Exceptions and escalation / resolution can be achieved more readily.
    • Cost / Benefit Analysis can be measured on Fair Remedy Conclusion.
    • Effectiveness of the Agent for closures can be immediately scored.
    • Tax Payer can get on with their life sooner at less impact on livelihood
Remodeling the Tax System:

There will no longer be a black hole when it comes to Taxes. What I intend to propose to Congress is a radical examination of our Tax System. This includes to seek the constitutionality of taxes, to make them fair, and to allow them to derive non taxable profit in the economy. In this manner, our assets will grow and strengthen in our economy while meeting the nations debt obligations.

Congress when looking for funds for specific programs which are not part of the nations debt obligations will use Social Welfare and Development Fund programs  only. All actual taxed revenue is to be applied to paying existing debt.

Constitutional Tax System

Amendment 16 of the Constitution states:
    "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
A persons wages are not considered 'Income' by Supreme Court Case Law: Building upon definitions formulated in cases construing the Corporation Tax Act of 1909, ( Stratton's Independence v. Howbert, 231 U.S. 399 (1913); Doyle v. Mitchell ) the Court initially described income as the gain derived from capital, from labor, or from both combined, inclusive of the profit gained through a sale or conversion of capital assets.

Wages should not be construed as income in the lower courts and a fair wage tax should be considered if any. This is a job for the Supreme Court to assure that Amendment 16 is regarded by the lower courts; and up to Congress to vote for an Amendment for a wage tax if any. Otherwise, the wage earner should not be paying any form of income tax.

If such a wage tax does occur, then its application as a flat tax would the the most fair. This does not intend that a wage earner should pay upwards of 2/5ths of their wages toward such a tax as currently, but that less than 1/5 should be needed.

Such tax is to be managed in the Investment Economy Model for addressing the nations financial obligations. In this manner, such taxes can build as treasury assets while paying of the nations debt in a profit based investment management system.

The personal deductible that can be applied to this wage tax is to only be for dependents and investments in our nation which is to lower reportable wages.

Corporate Business Income Taxes ( Non Banking )

Non Banking Business Income Taxes are to be managed in the Investment Economy Model for addressing the nations financial obligations. In this manner, such taxes can build as treasury assets while paying of the nations debt.

Deductibles and write offs will not apply to the cost of losses, but in terms of investment, R&D, and development; and for investments in our nation which is to lower reportable income.

Banking Business Income Taxes and taxes for taxable capital gains

In banking, every transaction is taxed currently. Netting is used as a means to average such obligations on a daily bases. This is for Billions of US Dollars in our Banking Systems.

Taxes which are to be paid quarterly to the Federal and State Governments, are to be invested in a non taxable investment fund that are managed by the institution in question. This is to be referred to as the Government Infrastructure Fund, or GIF.

Payment into the GIF is to be based on the daily netting amount. Those profits that are made on the GIF fund are to remain in the fund, and the quarterly tax on the following quarter, for the previous one are to be applied to the Investment Economy Model for addressing the nations financial obligations. In this manner, such taxes can build as treasury assets while paying of the nations debt.

Over time, the non taxable GIF Investment fund will build on its own due to its profits in addition to a Quarterly based payment by the institution. When the GIF investment reaches 4 times is original starting value, then 25% of this will be applied to Government Infrastructure Needs and 75% maintained in the original GIF.

As this 75% grows it is to replenish the 25% periodically. The 25% infrastructure assets are to further be distributed to the nation's states for infrastructure, housing grants ad loan programs.

An expected quota will be established for the funds performance. If this quota is not met by the bank, it will be compensated for by them.

The 75% is intended to see profit by its use in the institutions needs for Repo, Securities Lending, etc. This is to obviate the needed linkage between Institutional and Commercial banking entities.

Banks may structure a total management fee of 10% for their GIF. This may be applied into the GIF itself as a non taxable investment for the bank.

Orion Karl Daley
Orion Karl Daley
Balanced Party Presidential Candidate  for 2008