Most people consider their finances and their medical records to be the most personal of personal information. Even in the realm of Facebook, few people give details about these topics and most people are too polite to ask.
One of the many bad things about our current tax system is the need to give the IRS all sorts of personal finance information. How much you make. What you are putting away for retirement. What you are paying on your home mortgage (I know that is public information, but it should not be). How much you give to charities.
Today, in hearing an individual from our human resources department discuss the new Health Savings Accounts, or HSAs, that our company is creating, I learned that the IRS will soon be delving into another area of your personal life – your medical conditions.
Apparently each individual will divulge on their tax forms what they spent from their HSAs each year for medical expenses. If the money is used on approved medical needs, the money is tax-free. If it is spent on something else, taxes will be owed plus a hefty penalty.
If the IRS decides to audit you, they may request for you to prove that each expense was valid. This would mean giving the IRS, who already have all kinds of personal information about you from your tax returns, information about your medical treatments.
Have a wart removed on your buttock? A bureaucrat at the IRS may need to know.
Get a venereal disease? Have impotence? Have a strange rash on your back? Maybe AIDS or herpes? Better save these records in case the IRS gets curious. All we need now is for the IRS to get the nude body scan images from the TSA and pretty much nothing would be personal anymore.
How have we let this government, which when created was supposed to have a very limited role in providing defense, maintaining a few monuments, and settling trade disputes among states have such power over such personal aspects of our lives?
Now is the time to enact the Fair Tax. With the Fair Tax, all of this provision of information goes away. You will no longer need to keep receipts or set up all of these silly accounts to save money on taxes.
The Fair Tax would replace the income tax, Social Security Tax, Medicare Tax, and the business taxes. You would simply be charged a national sales tax when you make a purchase. Because the businesses would no longer be paying taxes on their income, and because they would not need to spend all of the money on accounting to prepare and plan their taxes, the prices of goods would drop, somewhat offsetting the sales tax.
The tax would be prevented from being regressive through the provision of a prefund. This would be a check that everyone would receive in the beginning of the year to offset the taxes you pay. Because everyone, regardless of income (again, no one would know your income), would receive the same prefund amount, those who make little would be paying a smaller portion of the taxes than those who make and spend a lot. Many low-income earners would not pay anything even if they spent every dollar they made.
Check out the Fair Tax and talk to your Congressman. Let’s get the IRS out of our personal lives.
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Disclaimer: This blog is not meant to give financial planning or tax advice. It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.