Perhaps the most urgent reason for tax reform is that we risk a breakdown in the implied contract Americans have with their government, as our system of generally voluntary tax compliance erodes under abuses by, and mistrust of, the Internal Revenue Service. However, my remarks today do not address that point directly, but rather deal with the changing nature of the workplace which will in the not too distant future dramatically increase the difficulty of identifying income, tracking income and collecting a tax on income. The current income tax system relies heavily on employers to collect taxes from employees.
Employers receive tax preferences for benefits furnished their employees.
The workplace is decentralizing as more and more people are becoming independent contractors and consultants, receiving income from a range of diverse sources. The family and how it functions is evolving, as wives enter the workforce and both partners assume nontraditional roles. These trends will intensify and, as they do, the current tax system will become even more cumbersome, intrusive and inefficient than it is today. Technological advances portend a time in the not too distant future when governments will be forced to turn to new ways of gathering revenue in a global economy. In the Information Age, the new source of wealth is not mainly material.