Indirect Taxation: A Plan to Collect All Wage Income Taxes Indirectly

The majority of Americans work for wages and paychecks to make a living. Therefore, it is logical that indirect taxes should be collected by employers, relieving individuals from the burden of filing forms and lists. This was the case with early tax laws, including Social Security and Medicare taxes (FICA taxes). US tax policy history that withholding taxes at the source was the standard procedure until the 1942 "Victory War Tax Act". Up until then, less than 2% of the population paid these "privilege taxes" or indirect excise taxes.

However, in 1944, millions of individuals were introduced to paying income tax on wages. These workers now pay the bulk of federal taxation, even though the original intent was to tax the wealthy. Taxes on wages have increased exponentially since 1944. Read: external link showing in 1944 payroll taxes increase to now, to the bulk of all federal revenues: History of Federal Receipts

The government should require all payroll taxes to be paid by employers upon the payment of wages, as such is the practice and law is now, except to relieve the wage earner from any further liability. As with all other indirect excise taxes, including the gas tax, once it's in the tank the end user has already paid the tax and is done with it.

Our financial institutions, literatures, textbooks, and all other nations describe income taxes as a direct tax. In opposition to this, the US Supreme Court historically and to-date catorigizes the income tax to be an indirect tax to avoid the Constitutional requirement that direct taxes are to be apportioned.

Plan: Withhold payroll taxes from paychecks

By eliminating filing requirements and any further liability of wage earners, once the employer has withheld any taxes, hundreds of millions of Americans would no longer need to figure and file tax forms. This alone would save billions of dollars and countless hours filling out and filing forms. This is a more efficient way to collect income taxes; collecting indirect taxes indirectly.

When the income tax is applied to employers the tax is collected indirectly, any further liability or tax may result in a direct tax on property.

1. Current Tax System Challenges
2. Complex tax code with over 70,000 pages
3. Average time to complete taxes: 13 hours
4. $140 billion spent annually on tax preparation
5. Eliminate more than 90% of IRS personnel
6. Return to Constitutional requirement of collecting taxes

Restate the tax law policy to tax “wage” income taxes for “collection at the source” by removing wage earners from the attachment of tax liability of all wages that are paid; thus, wage earners would not be required to file a return. Return to a very important constitutional principle to collect indirect taxes “indirectly”, i.e., placed on items of commerce, not on individuals. Allow wage earners in this country to better compete in the new AI global markets by making wage taxes uniform and efficient by collecting these taxes just once, at the time of payment.