Our Broken Tax Code
Our current income tax system is broken. It is complex, it is unfair, it inhibits saving, investment and job creation, it imposes a heavy burden on families, and it undermines the integrity of the democratic process.
America wastes millions of hours simply filling out tax forms. The cost is staggering. The non-partisan Tax Foundation estimates that tax code compliance costs will amount to $368.4 billion in 2010! In other words, for every dollar of revenue that goes to fund government spending, taxpayers pay a compliance surcharge of 15 cents just to help the government collect taxes.
That’s an extraordinary amount of waste. Instead of slaving to satisfy the whims of Congress and the I.R.S. bureaucracy this cost is time we could actually spend working or enjoying our friends and families.
The code is so complex because of the proliferation of deductions, credits, and other special preferences in the tax law. Because of these loopholes, taxpayers with similar incomes can pay vastly different amounts in taxes. This uneven treatment of taxpayers is fundamentally unfair and is at odds with the American value of equality under the law.
The current tax code does more than complicate people’s lives during tax season and reduce living standards. It also pollutes Washington’s political culture. As special-interest provisions have been added to the tax code, Washington’s lobbying industry has flourished.
It reduces incomes through punitive taxes on saving, work, and entrepreneurship. It places multiple layers of taxation on saving, thus reducing investments in new machines and technology that make American workers more efficient and competitive. High marginal tax rates (that is, the tax rate on the last dollar earned) discourage work, saving, and entrepreneurial activity, which leads to a smaller and less productive economy. By favoring certain economic activities over others, the tax code distorts financial decisions and reduces economic efficiency.
Other countries must think we’re crazy, too. By global standards, the United States has one of the most complex tax codes in the world. The current tax code obviously undermines our competitiveness, as American businesses tangle with an ever-growing sprawl of red tax tape.
The tax code is beyond repair. This is why want to Scrap the Code! and replace it with one that is simple, flat, fair, and honest.
