Keep it Simple, Stupid: The Tax Code Needs More Than Reform (8/31/2012)

NOTE:  This was originally published on Aug. 31, 2012 via Examiner.com.  My more recent proposal on tax overhaul is available on via the Independent Voter Network here.

With Mitt Romney officially installed at the Republican nominee for president, we have officially entered the home stretch of the election season, yet since the departure of Herman Cain from the primaries, conversations about drastic changes to the tax code have gone by the wayside.

Simplicity is often a common theme today but when it comes to government, the principle eludes us. Why is that?

We spend so much time arguing about tax cuts or tax increases, the Buffett Rule and the Bush tax cuts, ad nauseum, when the truth is our tax code is way too complicated for anyone to make an educated assessment of what tweaks would be best for the country. The idea that it can somehow be “reformed” is, in and of itself, a joke.

What we need is something other than 8000+ pages of tax code, a catastrophe of cumulative legislation created by politicians pandering to special interests year after year after year.

The left has created class warfare by vilifying the rich for a tax code which favors them in many ways but also completely exempts the poor. Of the two, the latter may be more palatable but it is not acceptable when you consider how many people who receive benefits do nothing in return and don’t try to move beyond them.

The rich definitely use the system as it is to keep more of what they have but so does everyone else who can afford a CPA. This is human nature. It’s fantastic for accountants, tax attorneys and IRS employees but for the rest of us, not so much. Meanwhile, the many in the middle class earn too much to eliminate their tax burden and are not eligible for assistance but can’t afford to make tax-advantaged investments or hire professionals to help them lower their outlay.

We can argue about what is “fair” all day. Is it fair to take a little more of what a wealthy person earns? That is a highly subjective query. It is perhaps more fair to the country that helped create the wealth and they can indeed afford it but most importantly, those of modest means have the vast majority of their income taken up with basic necessities with little left over that is disposable income.

However, paying nothing should not be an option either. Even if you just pay a filing fee…you have the same protection of our military and the use of our roads and much more. Perhaps if everyone has to pay even a nominal amount, in essence have “some skin in the game,” it will encourage more people to take a stake in their government and hold it accountable for wasteful spending and inadequately dealing with fraud and abuse.

The tax code is nothing less than an abomination and it is so complicated we cannot make an educated decision on anything. The solution is simple and the tax code could be reduced to a flyer. These are just guidelines and we can argue about the rates later.

  1. 1  Graduated, semi-flat tax
  2. 2  Little to no deductions, no loopholes
  3. 3  Everyone pays a little; the more you earn the higher your percentage in small increments
  4. 4  All income treated the same whether earned, capital gains or other, including a lower FICA rate applied to all income
  5. 5  Similar measures for corporate taxes
  6. 6  Small national sales tax to garner revenue from the underground economy
  7. 7  Eliminate cap on FICA tax (social security contribution)
  8. 8  Reduction or elimination of the death tax except perhaps for the VERY wealthy – it’s already been taxed and is a burden on those who aren’t wealthy and inherit property
  9. 9  Eliminate or drastically downsize the IRS, saving taxpayers billions

Unintended consequences: CPA’s and tax attorneys and IRS employees may have to find more productive work than earning a living helping citizens forced to negotiate with an egregious and immoral tax code. Sorry guys but the needs of the many outweigh the needs of the few. Live long and prosper…some other way.

Any questions?

How much of our political discourse and time in Congress is wasted talking about specific tax breaks, credits, incentives and other ways of pandering to special interests by inserting additional revenue rabbit trails in our tax code? There are many who feel that’s what makes legislators feel powerful and allows them to control us. Do you think if we relieved them of the responsibility of worrying about a pallet of ticky-tack bureaucratic baloney they might be able to work on actually accomplishing something?

In testing these ideas, liberals, conservatives and libertarians agree that this idea is at worst, a significant step in the right direction and at best, a short but complete template for a dramatically improved tax code. There are many things the left and right have substantial disagreement on but it seems at least in principle that in a simplified tax code we find common ground and that has been overlooked in Washington.

We continue on our current course at our own peril, not only unable to make informed decisions about what we can do but fighting over changes which don’t make any real difference.

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