Imagine an e-z tax season, over in minutes
A flat tax would end the cycle of political favors in Washington.
WASHINGTON — An engraving on the IRS building in Washington reads, "Taxes are what we pay for a civilized society." Unfortunately, paying taxes does not bring society a civilized tax code.
Tax Day reminds us every year just how unruly our tax code has become. A tax code should simply, fairly, and transparently collect the revenue necessary to pay for the functioning of the government. But America's tax code is fundamentally unfair, complicated, a drag on the economy, and encourages corruption. The entire tax code needs to be thrown out and replaced with one that is simple, fair, and flat.
Our annual tax ritual requires the average person to spend 26 hours filing a standard 1040 form, and more than 60 percent of us will pay for accounting services. Professional help is needed because America's tax rules and regulations are nearly 60,000 pages of special interest loopholes, convoluted legalese, and social engineering. This year, as a nation, we will spend 6.6 billion man-hours completing our taxes. That's more time than it will take to build every car, truck, and van assembled in the United States this year.
The US Department of Treasury estimates that the total cost of complying with the income tax is $125 billion a year. That's $125 billion a year that our capital markets, small businesses, and schools never see. Unreformed, the tax code could amount to a hidden cost of more than 1 trillion dollars over the next eight years.
In 1885, the Scottish economist J.R. McCulloch warned, "The moment you abandon the cardinal principle of exacting from all individuals the same proportion of their income or their profits, you are at sea without a rudder or compass, and there is no amount of injustice or folly you may not commit."
Congress is now paying the price for maintaining this tax code that encourages corruption by allowing politicians to hand out special favors. Fundamental tax reform would be real lobbying reform. Scrapping the current income tax and replacing it with a flat tax on all income would eliminate the considerable opportunity for bribery presented by the current code. By eliminating itemized deductions and special breaks, the flat tax removes the entire playing field on which tax lobbyists operate. A neutral law like the flat tax would transform the entire political culture in Washington.
Nine countries around the world are currently enjoying the benefits of a flat tax. A flat tax would allow a personal deduction for everyone so families could feed, clothe, and shelter themselves before paying the government. A family of four would get four such deductions. Any income anyone earned above that would be taxed at the same rate. No other exemptions. No loopholes. No mess. We could file our taxes in minutes.
A flat tax would also treat all income, individual and business, equally before the law and eliminate double taxation. The politically connected couldn't slide their way through exemptions. Americans wouldn't have to deal with the fear of becoming a felon for not understanding a complex code.
The $125 billion and 6.6 billion hours saved from hidden costs could be reinvested back into our economy, or, in the case of the extra time, enjoyed with friends and family. And in the global marketplace, a flat tax would make America a more attractive place for investment and job-creation.
Shortly after the founding of America, Chief Justice John Marshall prophetically wrote, "the power to tax is the power to destroy." Little did he know how destructive the tax code would become. It is time to scrap the tax code and start over. Americans deserve nothing less.
• Dick Armey, the former majority leader of the US House of Representatives, is chairman of FreedomWorks, a nonprofit advocacy organization.