One Simple Rate

Check out Monday's Wall Street Journal editorial by Steve Forbes: One Simple Rate.  Forbes continues championing radical reform of the travesty called our federal tax code.

The current system is beyond redemption, a beast whose complexity, confusion and outright unfairness have corrupted our economy and society. Americans waste more than $200 billion and over six billion hours each year filling out tax forms. They engage in all kinds of useless economic activity intended to take advantage of the code's complicated maze of deductions and to reduce taxes -- from deducting donations of old socks to making unwanted investments. The waste of brainpower -- at a time of increasing global competition -- is incalculable.

The code corrupts our system of government by encouraging the crassest political conduct and by creating a massive, intrusive federal bureaucracy. One-sixth of the private-sector employees in Washington are employed by the lobbying industry. One-half of their efforts are directed at wrangling changes in the tax code. Few people realize that our health-care system, with its runaway costs, is, in fact, the ultimate product of the tax-code distortion in our economy. And last, but most definitely not least, we simply pay too much in tax. When you take into account all the taxes, fees and tolls paid to the government, the typical American pays somewhere around half or more of his income in taxes. Why do we the people accept this? (One Simple Rate)

And what would be the result of the "radical" step of adopting a flat income tax?  Forbes predicts it would  would unleash an economic boom of historic proportions.

How would a flat tax do this? What so many "experts" can't grasp is that taxes are not only a means of raising revenue for governments but also a price and a burden. The tax you pay on income is the price you pay for working; the tax on profits is the price you pay for being successful, and the levy on capital gains is the price you pay for taking risks that work out. When you lower the price of good things, such as productive work, success and risktaking, you get more of them. The flat tax does that dramatically. (One Simple Rate)

I credit Forbes with my introduction to the flat tax concept and my father with the conviction of its importance (Note:  My father is a CPA. I'd love to put him out of business!  He'd love to see a flat tax as well.)

It's amazing how many nations are adopting a flat tax and how the "bastion of freedom," the ol' USA, has been stuck in the protectionist past.  Let's hope that Utah can lead the nation in doing what's right by adopting a flat income tax!

See also:
Deseret Morning News: Forbes thinks flat-tax battle will go his way

Comments

[Reach Upward]

Years ago I was an accountant working with federal taxes before becoming a computer programmer. I had a host of 2-inch thick volumes: 2 of actual tax code, 7 of regulations that further defined the code, and 29 that tried to make sense of it all. (There are more volumes today). Still, there were many points on which nobody could agree, including highly paid lawyers and CPAs.

All of this came about at the hands of our Congress and the bureaucratic infrastructure. While I regard many of our politicians quite highly, I somehow distrust their ability to actually achieve a true and fair flat tax. The alternative is simply more politically convenient. Please prove me wrong.

[Richard Miller]

Awesome article. I was a bit surprised, but glad, to hear your father, as a CPA, is in favor of a flat tax. Is that because he's retired or retiring soon? Any idea what the general sentiment towards a flat tax is among CPA's?

Today the WSJ also ran a letter from the Chairman of AMEX explaining the burdens Sarbanes-Oxley compliance puts on small cap companies. As an entrepreneur, I see less and less value in taking a company public. At least SOX compliance would give accountants something else (hefty) to do if income tax returns were suddenly simplified.

http://online.wsj.com/article/0,,SB112406088194912851,00.html