Our tax system is a monstrosity that began as a 4-page form for individuals to complete in 1913 and has grown to 176 pages, if you count today’s 1040 with instructions. For corporations, it’s even worse. The National Taxpayers Union reports that General Electric in 2006 set a record by filing a 24,000 page tax return! We waste 7.64 billion hours costing $227 billion trying to comply with the byzantine rules formulated over the years in response to special interest groups(1)
The flat tax saves money because it is simple
A flat tax would save time and money that could be spent on growing businesses and creating jobs. Here are the best reasons Tea Party Christians should favor a flat tax.
The current tax code contains 3.8 million words and takes a total of 7.6 billion hours and $227 billion to process/prepare tax returns(2). Now consider the flat-tax 10-line postage-card tax return above, where you basically enter your wages, subtract a couple of allowances, multiply the amount times 17%, subtract your withholding tax, and that’s it. Ten minutes tops.
Compare 10 minutes with the 24 hours it takes to process a typical 77-line 1040 form, not counting schedules. With the present 1040, to merely determine your income you must consider, wages, salaries, tips, taxable interest, tax-exempt interest, ordinary dividends, qualified dividends, taxable refunds, credits, or offsets of state and local income taxes, alimony received, business income or less, capital gain or loss, other gains or losses, IRA distributions, pensions and annuities, rental real estate, royalties, partnerships, S corporations, trusts, farm income or loss, unemployment compensation, social security benefits, other income. This is a joke!
According to the National Taxpayers Union, “The United States now ranks an embarrassing 124th out of 183 countries worldwide in total tax rate. Additionally, the U.S. ranked 66th worldwide for time spent complying with corporate tax filings, according to ‘Paying Taxes 2011,’ a study jointly published by the accounting firm PricewaterhouseCoopers and the World Bank Group” (3). We need to make the U.S. business friendly, attracting entrepreneurs from around the world not making it more burdensome.
The National Taxpayers Union states, “The Tax code is so convoluted that no one inside or outside the IRS understands it.” (4) They cite the 2007 USA Today story that asked five tax professionals to calculate a family’s tax bill and received five different answers. The National Taxpayers Union adds, “The IRS reported that taxpayers made an astounding 10.6 million math errors last year, up from 1.3 million the previous year” (5)
It need not be so. A flat tax would be simple, accurate, and efficient. We could collect the same total revenues, save time and money in the process, attract business entreprenuers and create jobs.
To Read More
David Keating, A Taxing Trend: The Rise in Complexity, Forms, and Paperwork Burdens (National Taxpayers Union, April 18, 2011) Available at: http://www.ntu.org/news-and-issues/taxes/tax-reform/complexity.html (April 15, 2012)
- David Keating, A Taxing Trend: The Rise in Complexity, Forms, and Paperwork Burdens (National Taxpayers Union, April 18, 2011) Available at: http://www.ntu.org/news-and-issues/taxes/tax-reform/complexity.html (April 15, 2012)
- Ibid, 1-2.
- Ibid, 5.
- Ibid, 14.
- Ibid, 2.