This is, simply put, one of the most absurdly brain-dead stupid things I've ever heard in my life. And I've heard some really stupid ideas in my life.
Whether this goes through or not, it's a perfect example of why we need to end the income tax and eliminate the IRS.
Company A pays an employee $100 per day, and provides a lunch which costs the company $10.
Company B pays the employee $110 per day, but the employee has to provide her own lunch.
Is it really fair that Company B has to pay more tax than Company A? Compensation is compensation, whether in kind or in cash.
The problem with taxing a product is that the actual value is unknown. In your example, taxing the lunch as $10 of income is actually giving the benefit to Company B due to the "reverse inequality of exchange". IE if you buy a $10 lunch, you actually value it more than the $10.
For accounting purposes though, it's $10.
That flexibility might be more valuable to the employee than the nice lunch.
I don't follow what this has to do with income tax, it's presumably a different benefits tax
> and eliminate the IRS
Well no. It's an example of one thing that the IRS can do. If you think it's silly (and I agree), it's an example of a silly thing that the IRS can do. But it's hardly evidence that the whole taxation system is broken.
Assuming a government needs to be funded, I don't think eliminating the income tax would even get rid of the IRS, since it would still need revenue of some sort.
As a side effect, they collect taxes or issue you your driver's license, it is just a means to the end of self-perpetuation.
Eliminating the income tax and going to a much more transparent method like higher fuel taxes (everyone pays them because everyone uses transportation) or some other broadly based consumption tax, would be excellent.
There is a reason why most reasonable people don't actually seriously consider implementing such tax schemes.
I know it's hard for people with good lives and great salaries to understand why, but please ask the people who clean your desks next time you see them what would happen to him/her, if fuel was taxed higher.
Allowing all expenses to be tax deductible would reduce accounting overhead incredibly, and would incentivize consumption and trade.
It's obvious how to tax consumption. It's (fairly) obvious how to tax income. How would you tax savings?
Is buying stock in a company "saving" or "consuming"? Is buying Bitcoins "saving" or "consuming"? What about gold coins/bars? What about guns and ammo? What about a collector car? Artwork? What about a house for personal residential use? What about a house for rental/income use? What about just holding suitcases of $100 bills?
It seems like there would immediately spring up a system of "not treated as savings" savings mechanisms. I seriously doubt that you'd accomplish your intended accounting simplicity...
If I have a car to drive to work, then I should be able to claim some proportion of it as a deduction. Currently that's not allowed (at least in Australia, where I'm from).
There are even countries that have a modest tax on bank accounts.