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With Tax Day only three days away, procrastinators are struggling to file their yearly taxes using the complicated tax code. In fact, the Internal Revenue Code is more than 3 million words. The 2010 edition of the Standard Federal Tax Reporter that explains federal income tax rules is 71,600 pages long. This document has doubled within the past decade.
Due to the complexity of the IRS forms, millions of Americans find it near impossible to file their taxes without assistance. A study has shown that 89 percent of taxpayers have given up and now pay for tax preparation software or a tax-preparer. Overall, individual taxpayers spend $28 billion on software, tax preparers and other costs necessary for them to file their own annual taxes. Even still, accidental and costly mistakes are made while filling out the IRS' complex forms. IRS commissioner Douglas Shulman even admits that he uses a tax preparer to file his own taxes.
I've used one for years. I find it convenient. I find the tax code complex so I use a preparer.
According to the IRS, the average taxpayer spends 26.5 hours preparing and sending in their taxes. Over a day of valuable time is lost each year that taxpayers could have spent being productive, spending time with family and friends or anyway that they choose. Every year filing taxes takes more time, costs more money and causes more headaches. In 1945, the instruction book for Form 1040 was four pages. Today, it's over 155 pages. The tax code is increasingly becoming even more corrupted by special interests. As a result, the United States has one of the most complex tax codes in the world.
There is an easy solution that will help fix America's messy tax code. Currently, 24 nations have adopted a single-rate flat tax system. Besides Iceland, all of these nations have tax rates below 20 percent. Overall, these nations have experienced economic growth and lower unemployment rates after implementing a flat tax. Unlike the United States, these citizens are able to file their taxes in a simple and easy manner.
Therefore, the United States should opt to implement a flat tax system that will not penalize entrepreneurship or saving investments. In a proposed flat tax system, the tax form will be as small as a postcard. According to Cato Institute scholar Daniel Mitchell,
The individual postcard is so simple that a third-grader could file a family's tax return in about five minutes.
The flat tax is fairer than the current system and will generate economic growth while eliminating special interests from the tax code. Imagine filling out your tax form within 5 minutes and not needing to hire a tax professional for hundreds of dollars. To learn more about how a proposed flat tax would work, please see the Daniel Mitchell video below "The Flat Tax: How it Works and Why it is Good for America."