TIME TO SCRAP THE TAX CODE
By Mark Davis
I love all weekends, but one that empowers me to ignore April 15 is extra special. The annual tax deadline is extended to Tuesday this year because the usual deadline is today, a Sunday.
What better opportunity to review the efforts of those who strive so that we might ignore April 15 every year?
If we ever get around to scrapping the current tax code - and enormous majorities always say they want to - a new battle will ensue: What do we replace it with?
The two main combatants are the sales tax and the flat tax. I am energized by both, but I've always leaned toward the flat-tax option. Maybe it has to do with my tendency to bond with whomever occupies Texas' 26th Congressional District. I spoke with Dick Armey scores of times on this topic during his years in that seat, and incumbent Michael Burgess is a friend dating back to his decision to stop delivering babies and start crafting laws.
Whether it was the "file on an index card" plan favored by Mr. Armey and his ally Steve Forbes or the Freedom Flat Tax introduced this year by Mr. Burgess, the concept is the same: Turn the IRS into little more than a processing center for a fixed rate of taxation to be paid by all Americans.
It has always chapped me that we are punished for our success. Obviously we should pay more tax as we make more money, but not as a function of percentage.
The only truly fair form of income taxation is to figure out the rate needed to run the government if you take it from every wage earner regardless of income. Make twice as much next year? Pay twice as much in taxes, not three times as much, which happens to many Americans as a punitive slap for their industriousness.
But I'm a flat-tax purist: Everybody pays in my world. Most proposals from politicians contain an exemption so that taxpaying doesn't begin until, say, $35,000 for a family of four.
While this protects them from charges of burdening people who are living paycheck to paycheck, it also effectively removes entire communities from the tax rolls. I shudder at the notion of millions of voters not caring one whit on that unavoidable day when someone suggests boosting the flat-tax rates. Taxpaying is a part of civic life, from the pauper to the billionaire.
If that's a little severe for your tastes, the sales tax advocates are here to soothe you with a glorious future of no IRS at all. Taxes would flow to the federal government from a 23 percent tax attached to every transaction for goods and services. And that's in addition to your state's sales tax.
Yes, you'd be shelling out roughly 130 bucks for that $100 item, but you'd be paying for it with something you've likely never seen before: your whole paycheck. Welcome to a land of no withholding - no payroll taxes, no Social Security or Medicare taxes - nothing to interrupt the flow into your pocket of every dime you earn.
The sales tax forces have even absconded with the most treasured adjective in this battle, referring to their proposal as "The Fair Tax."
It is fair, but so is the flat tax. I would take either one in a heartbeat over the insufferable status quo, but I'll lean toward the flat tax because it seems that the flow of taxes from citizens to the government should be stable.
Incomes don't vary much from year to year; consumer spending certainly might. I'd hate to run out of money for border patrol officers because we didn't buy enough refrigerators one year.
Also, bartering might remove billions of dollars from taxability, as Acme Office Supply trades file cabinets for sofas from XYZ Office Furniture rather than each company buying retail.
Tastes will differ. On this April 15, pick your favorite tax reform plan and dream the sweet dreams of a future when taxes are lower, simpler and fairer. Then shake yourself awake to the harsh reality of a federal government that will probably never allow it to happen.
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