Innovation and Square – A Solution to Tax Reform

No Innovation For Old Men

http://www.forbes.com/sites/theyec/2013/08/20/no-innovation-for-old-men/

The article discussed the new technology of Square, the little square device that can attach to a smartphone and take a credit card payment.  One possible solution to refining the tax code is to change to a tax system based solely on sales tax, similar to how states such as Washington forgo income tax for sales tax.  If the use of Square becomes prevalent, if cash use declines, and if the tax code is based on sales tax, the data from Square could eliminate the need and cost for tax preparation with the technology collecting sales tax.  Collection rates could increase, thereby possibly causing overall tax rates for those that were always honest about their income to decline.

Of course, now the dishonest use technology to “skim” whereby a credit card transaction is processed, but the vendor does not track the sale to avoid sales tax…

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