Here's the problem: Why do each of the 50 individual states need to have its own unique set of tax laws administered by its own revenue collection agency?
This only results in a massively inefficient bureaucracy of multiple state agencies all doing the same manner of interpretation, administration, auditing and collecting of taxes from a confused and frustrated taxpaying public. All of this seems rather redundant to me. As a tax professional with over 30 years of experience working with individuals, small businesses and large Fortune 500 corporations, I can see no reason for the level of complexity that exists currently in the state tax arena. In the current economic environment where nearly every state is looking for ways to raise revenue, slash budgets and attract new business within their borders, it all appears extremely wasteful to have each state working so hard to administer an individual set of complex rules and regulations with the sole goal of collecting revenue from taxpayers. The whole structure of state tax collection is needlessly redundant. There is an army of state (not to mention local) employees working with generally inefficient systems, inadequate funding and insufficient support trying to collect the tax dollars so desparately needed to fund government budgets.
In addition to the inherent wastefulness of 50 different state agencies to collect taxes, consider the enormous expense and effort imposed upon taxpayers to make an honest attempt at complying with 50 different sets of rules and regulations, court cases and administrative policies. Which, by the way, are constantly being changed and tweeked by the 50 different state legislatures for either revenue raising or social policy purposes. The army of accountants, lawyers and support persons needed to comply with the current tax strucure is staggering. I know, I am a member of that army. This army is highly educated and generally well paid.
So now there two armies of people working to navigate through the maze of complex, often poorly written tax rules to determine how much is owed and by whom. The insanity of all this must be clear to nearly anyone who has ever earned a dollar. The only benefit from this? It is a great jobs creator. Wasteful? You bet! It drains state budgets merely because of its inefficient nature and forces individuals and businesses to hire expensive staff and consultants to comply.
Here's the solution: Quite simple really.
Create a single unified multi-state tax collection agency which will administer a single set of rules and regulations for the collection of state taxes. And yes, while we're at it, the computation will be made so simple that it can be easily administered by both the tax collector and the taxpayer.
So that is the purpose of this blog. To create a forum to flesh out the details and present solutions to this wasteful environment. I propose to start with the Income Tax first since it the area of my own expertise and the one I think is actually the most complex currently and is most in need of repair. The approach I will be proposing can be applied to both the individual income tax and the corporate business income tax. The ultimate goal will be to champion a new simplified approach to state tax administration that will benefit both the collector and the payer. If successful, I may be putting a lot of talented people out of work. However, isn't better to put those great brains to work doing something more beneficial to society than merely calculating tax liability?