Prepare a Postcard-Sized Tax Return in 10 Minutes

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)

References

  1. 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)
  2. Ibid, 1-2.
  3. Ibid, 5.
  4. Ibid, 14.
  5. Ibid, 2.

 

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8 Comments

  1. Roberto says:

    I work and have a home based type business (party plan) and do prtety well with it, as well as my regular “day job” which I have had to cut back on hours because the home business is doing so well.I file together, using a schedule SE for my home business to take the deductions out such as mileage (a HUGE deductions) airfare and hotel for training events, and usually after the mileage is calculated I wind up owing nothing on my home based business. I also deduct postage and advertising expenses, and office supplies, demo products, and any losses such as damaged or broken items I write them off.I do travel quite a distance to do my parties, several times a week.You cannot deduct clothing or dining expenses, or “fluff” your deductions, it will set off a big red flag, so be very careful that you only deduct what you actually can legally. Was this answer helpful?

  2. Ariel says:

    Also a 1 percenter – I wokerd hard and started with nothing except for college loans to re=pay, which I did before trying to buy a first home with a few percent down. Soon the increasing state, local and federal taxes will take away any incentive I have to grow my business and work harder. I am almost there now. And should I close up shop, as other 1 percenters might, other people lose jobs. You should think about that. Take away incentives to improve, and those that make the jobs and small businesses grow just go away…I am for anything that makes the system as whole more fair for all. The class warfare is utterly ridiculous. Pick whatever flat tax or graduated tax that seems more fair, the current system is not fair by any stretch of logic.

  3. Nobza says:

    Oh, I guess I was wrong.The rich in this country are just sueinrffg terribly. They can hardly get by. They’re taxed so much they can hardly get themselves out of bed every day.Hopefully we can get rid of the “death tax” completely so their kids won’t have to work. We’d be much better off if the controlling class didn’t have to see what it’s like to walk a mile in our shoes “working for a living.”God forbid should the people with the money and power to manipulate our government have the breadth and knowledge of real life experience!”Let them eat cake.”

  4. Vince says:

    Back in the 1950s and 1960s, under Eisenhower, JFK, LBJ and very conservative Republican and Democratic (Southern, lelragy) Congressional leadership, the top federal tax rate topped 90 percent, the federal debt as fraction of GDP was declining sharply, inflation was low, and economic growth superb. We simply are not serious about paying down the debt anymore.The top 400 taxpayers barely pay more in income taxes than Joe Schmoe anymore, as a percent of income. Jeez, when you consider than people under $100k in income usually pay 7 percent Social Security taxes on every dollar earned, these figures actually suggest a regressive federal tax system. Add another 7 percent in employer taxes in Social Security.I actually like the flat tax idea–if we move Social Security and Medicare under the flat tax. That is, a single flat federal tax on all income, plus a real whack at income of more than $10 million a year.

  5. Etsuko says:

    nickanoo-you have that totally brkdwaacs.where did these people get their money? by doing something or producing something that other people found valuable enough to spend a lot of money on. how terrible and exploitative of them to provide goods and services that people want. you need to get over this zero sum fallacy that somehow there is always a certain a amount of wealth and the fact that some people have more means they are hogging it.it doesn’t work like that. if these folks weren’t doing what they were doing and producing wealth and jobs and goods, we’d all be worse off.you should be thanking them, not blaming them.wealth doesn’t come from some fountain somewhere. someone has to create it.

  6. Bit says:

    From the source data – the after inoiltafn adjusted gross income of the non-top-400 (which includes a lot of very rich folks) increased an average of about 1.25x per taxpayer from 1992 to 2007. The top 400 increased their AGI 5x in the same period.In that same period that their AGI somehow grew 4x faster than the rest of us, their share of taxes grew only 2x.So fine – let’s not “soak the rich”. But I’d say they’ve pretty clearly been soaking the rest of us, in both the share of income and share of taxes!

  7. Pabbisetty says:

    Junkyard sam has it all wrong.First “allow people to aqucire nearly infinite wealth”Sorry Sam, our government was invented to allow for just that.Prior, it was being born to wealth and power, not to aqucire it by work, invention or just luck.Secondly, the threat to liberty is not rule by Bill Gates, it’s rule by the soon 50+ % who will pay NO income tax and insist through voting for socialists that wealth be taken from those who have succeeded and given to those who have not.Sounds like you are ready to give it to them.

  8. Nedia says:

    Dear aonepercenter:I am not actndaviog that anyone have to pay a 33 percent tax rate, though of course the highest Federal tax brackets are much higher than that especially when you consider how deductions are phased out at higher incomes. Add state and local taxes to it and you get even much higher rates. In any case, if someone earns 10 times more in income, why not have them pay 10 times more in taxes? Why the equivalent of 70 times more?

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