, the main argument for a flat tax
is that it will vastly simplify the tax code
. At last count, there were over 700 IRS
forms and over 250 IRS publications
attempting to explain them. The American
tax code consists of over 7,000,000 words. The code
is totally incomprehensible. Even veteran IRS
workers don't understand the tax code
. Last year, 37% of inquiry calls to the IRS
went unanswered, and when the intepreters of the tax code
bothered to come up with an answer, they were wrong 47% of the time! Statistics courtesy of the General Accounting Office
As a result of this, the tax code is filled with loopholes and legal backdoors. Most Americans will be able to save a few dollars, but the true beneficiaries of the bloated code are the rich people who hire tax lawyers to comb through their finances and claim every exemption possible. Not all rich people do this, just some (yes, another liberal stereotype exposed). They are able to save thousands, sometimes millions of dollars by referring to some arcane passage in the tax code and getting tax exemptions. Liberals applaud the current tax code and want to pile more regulations and forms into it, but the only thing they managed to do is give more loopholes for people to exploit.
The current American tax code is incredibly progressive. Don't let any liberal tell you that it isn't; last year the top 10% paid over 40% of all American taxes, while the bottom 25% did not even contribute 10% of all tax revenues. President Bush's tax cut is also quite progressive, everyone gets a tax cut and the poor regain a far higher percentage of their income than the rich. The problem is that the tax cut will inevitably add even more bloat to the code. Any time you change the tax code, it becomes more complex and hence more vulnerable.
The flat tax will do away with the immense tax code and replace it with a simple, progressive tax. The most common liberal complaint against the flat tax is that it is "regressive". That is a blatant lie. The flat tax allows two adjustable parameters, the personal exemption and the flat tax rate. Each person gets a personal exemption. Subtract the total personal exemptions from the total income and you get the taxable income. The flat tax rate is then applied. In this system, the poor would be totally exempt from taxes! The more you earn, the more you pay. To make the flat tax even more progressive one would simply increase the personal exemption. It is obviously a progressive tax. The main benefit though, is that there is no escaping it. Tax lawyers will have to work in Canada because every American will have to pay their share.
That is why the loudest opponents against a flat tax have been the tax-dodging rich, because they will have to pay more taxes, and the liberals, because they cannot stand to have their tax code dismantled.
So what would happen if the flat tax was implemented in America? The IRS would be cut down to a mere fraction of its former size, saving millions. There will be equal and fair tax justice. And Americans would regain 4.3 million man-hours of productivity. Most propsed flat taxes would collect an equal amount of revenue compared to the old, bloated tax code, so yes, there will still be social security, and public spending, and all the wonderful things that liberals love and cherish.
If you ignore the apocalytic naysayers and their prophecies of social doom for a bit and examine the case for a flat tax you would find that it is indeed progressive, and far superior to the current American tax code.