The current income tax works as follows: Each payroll cycle employers file detailed records with payroll information to the government. Once a year workers file tax returns with detailed personal information.
The IRS uses a massive internal database to match the detailed payroll records with the detailed personal records to make sure your taxes are in order.
The Object Tax creates a computer program called A Tax Aware Account.
Workers will set up Tax Aware Accounts through a third party of the workers' choosing.
Employees who opted to us Tax Aware Accounts would receive their entire paycheck into their account and report this fact to the IRS along with the rest of the payroll.
Unlike the current system where each taxpayer has a single id, the Tax Aware Accounts can have numerous ids.
The Tax Aware Accounts have all of the information needed to calculate a progressive income tax. Workers will pay their tax when they withdraw the funds.
While this system does not completely eliminate the need for an internal database at the IRS, the system establishes the Tax Aware Accounts as the primary taxpayer database.
From a database perspective: the Object Tax is replacing a massive internal database owned by the government with a massively distributed database with the data actually owned by the taxpayer.
From the end user perspective, the system works as follows. First of all you are given a choice of sticking with the current income tax system.
If you choose to switch to The Object Tax you will set up an account with a third party provider of your choice. You will enter all of the information needed to calculate your tax.
You will be able to generate multiple IDs for a given account. You will generate an account number and give the number to your employer.
Your employer will verify the account then start sending your full paycheck to the Tax Aware Account.
NOTE: You will actually pay taxes when you withdraw money from the account.
The Object Tax will build portability into the base of the system. If you are upset with your third party provider, you can switch providers.
These providers, of course, will compete for your business. They will add interesting web based and mobile interfaces to the accounts. I anticipate that many providers would add budgeting software and other features to the account.
The system is designed to make the Tax Aware Accounts the primary data store for taxation. The IRS and state tax authorities will occasionally need to access your accounts.
The accounts will include event tracking features; so, if an IRS agent or state auditor looks at your account; your account would record the event and what part of the account they visited.
I realize that what I am doing with the object tax is very geeky.
I work as a database programming. The proposal is to replace a massive government owned database with a massively distributed privately owned database.
The reform has a geeky name "The Object Tax." The book I am writing is filled with geeky concepts like "massively distributed databases."
On a rare occasion, geeky thought processes sometimes create extremely cool things.
I am basically proposing to use the same design methodology used to create the smartphone to upgrade our tax collection process. I don't hang out with the cool kids, but when I stare across the lunch room to the cool kids table, I notice that they all seem to have smart phones.
Anyway, I am running a kickstarter campaign to self-publish a book about this approach to reform. So far I have received no feedback.
That's probably because the reform proposal is blatantly geeky.
But, think about it, which would you rather see, the tax collection system designed by politicians (the cook kids) or one designed by the geeks?
HINT The current tax code is what happens when the cool kids design society. Geeks tend to make cool gadgets like smartphones and the internet.