Personal Exemptions Consumption Tax (PECT): A new tax for the 21st century
Abstract
The federal income tax code is extremely complicated. The Internal Revenue Code (IRC) has grown from 14 pages long in 1913 to over 7,600 pages today, not including more than 47,000 pages of regulations and court cases. No one clearly understands the IRC including tax lawyers, professors of taxation, certified public accountants, the Treasury Department, the Congress, or even the IRS. Compared to the federal income taxes, state income taxes and sales taxes are simpler. However, each state has its own regulations, its own tax form with different tax rates as well as different due dates and filing requirements. For a multi-state company, compliance with about 8,000 tax jurisdictions is a nightmare. During the last few decades, several tax reform proposals had been introduced to correct the complexity of the federal income tax code. Each of them has some advantages but also contains some shortcomings. All the major tax reform proposals share a serious flaw: they all focus on the IRC and attack the IRS; none of them address the combined federal, states, and local governments as one tax system in the United States. The objective of this dissertation is to search for a new tax system for the United States. This new tax must be revenue neutral, simple, fair, and acceptable by both government and Americans. This new tax is the Personal Exemptions Consumption Tax (PECT). PECT employs the principles of a national sales tax but operates like a value-added tax, and offers personal exemptions like an individual income tax. PECT would be able to replace the federal individual and corporate income taxes; state individual income taxes in 41 states; state corporate income taxes in 46 states; sales and use taxes in 45 states and 7,500 local jurisdictions. In replacing these taxes, PECT would eliminate more than 400 million tax forms each year and would save Americans billions of hours and billions of dollars for tax compliance per year. PECT is the new tax for the 21st century. It has never been enacted anywhere in the history of the world.
Subject Area
Finance|Public administration
Recommended Citation
Dang, Tuan Q, "Personal Exemptions Consumption Tax (PECT): A new tax for the 21st century" (2004). ETD Collection for Pace University. AAI3173699.
https://digitalcommons.pace.edu/dissertations/AAI3173699
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