[edit: Andir fixed it.]

 That's discretionalry spending.  That's basically money that is used for things not entitled (Salaries).  Sorry for the confusion.  I'm getting the Total costs now.

[edit: Saw the above post, so the fact that the 11.6B is 0.4% of FY2008 budget (~2900B) is less relevant.]

Treasury total (Manditory + Discretionary) expenditure estimates for 2008:

518 Billion (17% of the 2.9 Trillion total)

http://www.whitehouse.gov/omb/budget/fy2008/pdf/08msr.pdf (page 34 [PDF 42])

I'm having a hard time finding how much of that is IRS cost, and I have to get to work.

It's not only the IRS cost, but the costs to the taxpayers trying to comply with Income tax code:

"In 2005 individuals, businesses and non-profits will spend an estimated 6 billion hours complying with the federal income tax code, with an estimated compliance cost of over $265.1 billion. This amounts to imposing a 22-cent tax compliance surcharge for every dollar the income tax system collects. Projections show that by 2015 the compliance cost will grow to $482.7 billion." - www.taxfoundation.org/files/sr138.pdf

As far as the people working in these jobs, it's not like there aren't other ways to make money in the world.  I know it's a stearn outlook on their dependency of the system, but you can't expect the taxpayers to continue pouring money into a system that just needs more and more each year in a neverending cycle.  A flat percentage would virtually eliminate this spiral or signifigantly cut it down.

 Again, the 11.6 Billion is discretionary spending.  This isn't operating cost.  This is the amount of money they get to spend each year on things like equipment and supplies.

Edit:  at least I'm pretty sure... ugh.  I'll look later.

I'm all for looking into ways to simplify the tax code. I think this could be a way to do it.

I'll try to address two concerns that people seem to have.

1) Not enough taxing of the rich: I'll avoid the Rand arguements here, but just suggest that maybe look into Atlus Shrugged. But to be more definitive in my answer I'll say this. Rich people don't hoard their money in banks or cash under their mattress, they invest it. This investment can have a powerful effect on the economy, see the credit crunch. Imagine if wealthy individuals could invest more money, that should help increase liquidity in the markets.

The fact is that the increased investing power of the wealthy could help grow the economy, leading to more jobs and better pay which would be a good thing.

Also, look at it like this, Warren Buffet paid 18% or so federal income tax rate last year. Why? most uber rich earn with stock options and dividends, which are taxed at 18% or so, which is much less than the middle class actually cash pay gets taxed at. So as it is the system is not going after the rich.

2) Charities would not suffer as bad as some may think. First off Charities have tax exempt cards that they use to avoid paying sales taxes as it is. I know because I used to be a treasurer for one. Also, most charities rely on contributions from individuals and in that aspect the US is the most generous nation on the planet by far, and that is not national bias, it is fact. I believe the stat was the average US citizen gives about double what the next most generous nation gives in terms of percentage of their income. UK being number 2. I read the report awhile back, if I can find it again I'll link it.


Now to be fair I have my own concerns, mine is the housing market, which is already soft. Add on a 23% markup to home prices for taxes and it may collapse. Buyers won't pay it, so sellers will be losing a lot of equity which may spur foreclosures which would hurt the economy badly.

THe other issue I have is the lag time it would take between the two tax systems. There are a lot of things the US government should fix, social security comes to mind, but without a budget surplus to fix these things, it would mean more debt. How much more debt can the US take on? In terms of debt as a % of GDP Japan and I believe Australia are worse off, but still lets not try to outdue them on this issue.

1) Very Good question, however, it's only a question because you are thinking in income tax terms. The Fair Tax replaces income tax and cooperate tax. Here's a functional example

Income tax: American Vactioner to Florida spends $1000 dollars for that vaction. Before he ever arrives in Florida he is taxed on that $1000 of that income between 20-30% or between 200 and 300 dollars.

Fairt Tax: American Vactionaer to Florida spends $1000 dollars for that vacation. After he arrives he is taxed 23% for everything he buys. His tax burden is $230 dollars.

since the Fair Tax is designed to be price neutral the vactioner's buying power remains the same.  Also there's a cherry on top. Non-American vactioners, including illegal immigrants, cannot escape paying the tax, yet they will not mind or even know that they are paying the tax since the sticker price will be about the same as before.

2) Charities will not be harmed, but they will have to change tactics. Right now they do appeal to people getting tax benefits for large donations. They may have to appeal to people who actually care about others.

3)Underground economy will still exist, a tax code cannot get rid of it. But they will be taxed when they spend that money. Whenever they buy an item. they are paying tax. Here's a functional example:

Income Tax: A prostitute makes $1000 a night. Her income tax burden is between 20%-30% or $200-$300. However she does not claim her income so she cheats the federal government the income tax she owns.

Fair Tax: A prostitute makes $1000 a night. When she pends that money she makes she will pay the federal tax of 23%. She cannot avoid it. She is paying for social security, welfare, and medicare.

Now, I realize many feel that she can avoid it if she saves it or invests it. But I ask these people what happens to that money that is saved and invested? Yes, it is eventually spent and taxed.

4)This is a false premise. By this question you show that you sincerely believe that corporations pay taxes. You are wrong. Corps get money by private citizens. Any taxes they are able to pay is made possible by funds they gathered from us thru pricing structure. Here's an example.

Income tax: American earns $1000 dollars. He takes home $800 dollars after taxes. With that money he buys a PS3 and some games and spends $500 leaving $300. Sony takes that $500 and divides it amoung payroll, CORPORTATE TAXES, R&D, bills, shareholders, and profit. 

Fair Tax:  American earns $1000 dollars. He takes home $1000 dollars after the abololition income of taxes. With that money he buys a PS3 and some games and spends $500 leaving $500. Sony takes that $500 and divides it amoung payroll, THE FAIR TAX(23% or $115), R&D, bills, shareholders, and profit.

5) There are many theories as to what will happen with prices. But again you are operating from a false premise. The prices of good will not go up. Some companies MAY try to take advantage and increase prices by 23%-30%. However, the nature of capitalism and competition would make doing so very difficult at least and a stupid mistake in most cases. The Fair Tax removes all tax burden on corps which will collapse prices by 10%-40% resulting in price that will offset the Fair Tax. Here's and Example.

Income Tax: Product costs $500 - from that $500 the company needs to pay corp taxes and compliance costs.

Fair Tax: Same product costs $500 - from that money the comanpany sends 23% to the federal government and there is no compliance cost since a lawyer and accountant will not be needed on payroll. 

Imported goods may see slightly higher prices, but more than likely it would be neutral again. The theory behind this is that companies that import will no longer have to pay tariffs or taxes or coperate taxes, which would amount to 20%-30%, easily offsetting the Fair Tax. 

I think you confused Legends point 1. He meant foreign tourists I believe.

My shot at answering that is look at it like this. The hotel has to pay corporate taxes and hire accountants to prepare them. Lets say a room cost $200 a night now, under this plan a foreign tourist would have to not pay $246 for that room right? No, not likely. part of the $200 a night is a built in cost for the hotel to pay their taxes and hire accountants and so on. so the price will likely fall to say maybe $175 a night or lower. This means the tourist would pay $215 for one night. Is it more, yes, but probably not as bad as you might have been thinking. I don't know enough about corporate taxes to know how far the room price might fall, but from what I have heard from those that do, the effect will likely be a wash between current and proposed future prices.

Anyone that knows more than me, does this make sense?

Except for the prebate commission which would take nearly as much if not more man power as they IRS. To run the registration centers in every town, heck a few in every town since the poor can't find good travel to get to places. I've known people who couldn't get welfare because they couldn't get a ride there.

Oh, and the agents needed to audit the prebate numbers, to make sure that nobody is frauding the system, oh and the agents needed to audit every buisness in the US to make sure they arn't selling goods as for other sales instead of final goods.

I'm not seeing where the cutbacks in the IRS would be made.

Selling a home wouldn't see a tax since it's not a new item. Only new homes would be taxed I believe.

The main issues with this system are logistical, and in my mind the fact that it'd be hard to implement shouldn't really be a barrier or nothing in this country will ever get fixed.