In this writer’s opinion, some form of flat tax (percentage of income) or fair tax (national sales/consumption tax) system is not only common sense, but efficient, workable and fair.
Under a Flat Tax, If you make Ten times the money, you pay ten times the tax, period. Under a Fair Tax system, the more you consume, the more tax you pay.
Add to this a mechanism by which the poorest American’s would be exempted, and 20,000 pages of confusing tax code can be whittled down to a Hundred or so easy to understand pages.
If, for some reason you wanted it to be unfair and add an extra burden on “The Super Rich” an extra sales tax on residences over One Million Dollars, boats over One Hundred Thousand Dollars and so on would do that. The exact numbers, of course, will need some study, but should be relatively easy to decide.
So, if it’s efficient, fair and workable, why is it unlikely to happen?
Like the flat tax itself, the reasons are simple and obvious.
Envision a tax system in which there was no April 15th except for rare and special cases.
Envision a tax system so simple that armies of CPA’s and lawyers are no longer needed to help businesses and individuals with their paperwork.
Imagine searching Google for Tax Preparation Services and getting back 1,350 results and not 1,350,000.
You can probably see where this is going. If an auto maker can be “too big to fail,” what about the huge segment of our economy built around today’s complex and confusing tax code?
Everyone from national companies like H&R Block and Liberty Tax Service, to self-employed and part-time tax preparers will see their industry, and the affiliated support services, evaporate almost overnight.
The loss of accounting jobs, while serious however, is not the big gotcha. The main roadblocks to any degree of code simplification are the lawyers who will have to either re-purpose their practices, change professions, find honest work or join the unemployed.
Can it be coincidental that so many good ideas most often meet their “last stand” at the hands of lawyers.
Can we all agree that one way or another, the United States Tax Code must be simplified?
I spoke with a pharmaceutical CEO not long ago, and he estimated that around 1/3 of today’s health care costs could be attributed to legal expenses, lawsuits and ineffective bureaucratic hoops and regulatory paperwork.
But that’s another subject altogether.
See: “Lawyers, the Other L-Word.”