The income tax is structurally flawed. As Part I of the book explains, some of the flaws are inherent in the income tax and some are self-inflicted. The income tax is needlessly complex, contains perverse incentives against saving and investment, fails to use modern technology to ease compliance and collection burdens, and is subject to micromanaging and mismanaging by Congress. These problems, in turn, lead to noncompliance with the income tax resulting in hundreds of billions of dollars of tax revenue not collected each year, and to large costs required to run the tax system. This book propo ... More

The income tax is structurally flawed. As Part I of the book explains, some of the flaws are inherent in the income tax and some are self-inflicted. The income tax is needlessly complex, contains perverse incentives against saving and investment, fails to use modern technology to ease compliance and collection burdens, and is subject to micromanaging and mismanaging by Congress. These problems, in turn, lead to noncompliance with the income tax resulting in hundreds of billions of dollars of tax revenue not collected each year, and to large costs required to run the tax system. This book proposes that the solution to the problems of the current income tax is to abandon it and completely replace it with a progressive consumption tax collected electronically at the point of sale, which the book calls e-Tax. e-Tax is based on a European-style, credit value added tax (VAT) because with modern technology a VAT can be collected electronically and automatically. e-Tax builds in progressivity at the wage-earner level. It combines straightforward concepts with appropriate use of technology to achieve ease, efficiency, and assurance of compliance and collection. In developing and discussing e-Tax, Part II of the book explains how a tax on consumption will serve the country better than a tax on income. The current tax system is an eclectic income tax/consumption tax system already and an efficient and leak-proof tax system is best designed as a point of sale tax on transactions as they occur.