Tax code should be simplified

Single tax rate bracket would be the most fair solution

With all the bitter rancor over the tax reform bills making their way toward reconciliation, one might wonder if the effort is worth it. Let me assure you that it is long overdue.

The current income tax code consists of 75,000 pages and requires over a million tax preparers to help taxpayers to complete their returns. The tax code is highly progressive with seven tax brackets, meaning that high-income taxpayers pay the highest rates while lower-income taxpayers pay either zero or the lowest rates. However, no one perceives the tax code to be fair. Those at the bottom feel the system favors those at the top who can afford the best tax professionals. Those at the top feel the system favors the bottom 50 percent who pay no income tax. Both are correct.

The congressional tax reform proposals to date have good and bad attributes. On the good side, they move toward more simplicity with fewer tax rate brackets and elimination of several special deductions. On the bad side, they add to our national debt and are not being developed in a bipartisan fashion.

Yet they do not go nearly far enough. It’s why I am proposing a FAST — Fair, Adaptable, Simple, Transparent — income tax proposal that moves us to a single tax rate bracket over a reasonable period of time. Here is how it would work:

We reform the current income tax system to a single tax rate bracket with no deductions, exemptions, credits or allowances after a 10-year transition period. This transition period allows everyone to adapt and prepare for the coming changes.

Moving to a single tax rate bracket would be FAIR. Every American would pay their share, and there would be no feeling that someone is taking advantage of the system. People with significant income would pay a significant amount of income tax. People with little income would pay little income tax.

A single tax rate bracket would be ADAPTABLE. If we decided to increase a benefit such as health-care subsidies with no budget offsets, then we simply increase the single tax rate to a higher amount to fund the new benefits. If we needed to flex our military muscle beyond our current budgets and had no offsets, then we would again increase the single tax rate to balance the budget. The reverse would also be true if we were to eliminate a benefit or draw down our forces. The single tax rate could be decreased instantaneously by an act of Congress.

This single tax rate bracket would be SIMPLE. The tax payment would be deducted from people’s paychecks with no need to file a tax return. For business owners, the tax payment would be submitted along with regular filings. No one would need a tax preparer. Time previously spent on unnecessary compliance work could now be converted to productive, value-added activities.

The single tax rate bracket would be TRANSPARENT. Everyone would know that single rate. Without the current myriad of deductions, exemptions, credits and allowances, we would all be treated the same. The level of trust in the system would rise dramatically because of the new openness in the tax code. The influence of lobbyists would be eliminated.

In addition, as the proposed name implies, the FAST tax proposal would be speedy. With no tax return to file, all we have to do is verify the payments are consistent with our personal records.

Finally, the 10-year transition period would allow us to complete business modeling to arrive at the single tax rate that would work best for our country.

It’s time for us to be bold. It’s time for us to make revolutionary changes to our tax code. Small tweaks to our current system are doomed to failure. We need to move beyond trying to perfume the pig. It’s time for a different animal.

Think FAST — Fair, Adaptable, Simple, Transparent — with me.