President Barack Obama has formed a panel designed to look at ways to revise the United States tax code, a laudable goal. The panel will be headed by Paul Volcker and will include Republicans like Martin Feldstein and Democrats such as Laura Tyson.
The commission will be charged with "closing loopholes, streamlining the law and generating revenue." The only constraint is that taxes would not be raised for people making under the magic $250,000 a year. The report is due December 4th of this year.
Attempts to simplify the United States tax code, so complicated that the Internal Revenue Service often is unable to fully understand it, has a long and storied history. President Reagan, with the help of then Chairman of the House Ways and Means Committee Dan Rostenkowski, managed to remove a myriad of loop holes and tax breaks in return for a two tiered system of 28 percent and 15 percent tax, with a "bubble rate" of 33 percent, on all personal income. The system did not last for very long. President George H. W. Bush and then President Bill Clinton raised income taxes, expanding the number of tax brackets from two to eventually five. There are now six tax brackets. Congress rapidly inserted more tax breaks and loop holes in order to satisfy political whims and important constituencies. A bi-partisan commission under George H. W. Bush issued some recommendations that proved to be dead on arrival.
Various proposals for a "flat tax" or "fair tax" have been floated for the past ten or so years, ranging from one offered by Steve Forbes to one proposed by former Arkansas Governor Mike Huckabee. The flat tax would institute one single rate on all income with few or no deductions. The fair tax would scrap the income tax altogether and would tax goods and services at the point of purchase.
The appeal of a simplified tax code is patently obvious. The average tax payer spends many hours and considerable money simply complying with the tax code. Businesses are forced to hire battalions of lawyers, accountants, and computer programmers to pay corporate and other taxes.
The commission will be charged with "closing loopholes, streamlining the law and generating revenue." The only constraint is that taxes would not be raised for people making under the magic $250,000 a year. The report is due December 4th of this year.
Attempts to simplify the United States tax code, so complicated that the Internal Revenue Service often is unable to fully understand it, has a long and storied history. President Reagan, with the help of then Chairman of the House Ways and Means Committee Dan Rostenkowski, managed to remove a myriad of loop holes and tax breaks in return for a two tiered system of 28 percent and 15 percent tax, with a "bubble rate" of 33 percent, on all personal income. The system did not last for very long. President George H. W. Bush and then President Bill Clinton raised income taxes, expanding the number of tax brackets from two to eventually five. There are now six tax brackets. Congress rapidly inserted more tax breaks and loop holes in order to satisfy political whims and important constituencies. A bi-partisan commission under George H. W. Bush issued some recommendations that proved to be dead on arrival.
Various proposals for a "flat tax" or "fair tax" have been floated for the past ten or so years, ranging from one offered by Steve Forbes to one proposed by former Arkansas Governor Mike Huckabee. The flat tax would institute one single rate on all income with few or no deductions. The fair tax would scrap the income tax altogether and would tax goods and services at the point of purchase.
The appeal of a simplified tax code is patently obvious. The average tax payer spends many hours and considerable money simply complying with the tax code. Businesses are forced to hire battalions of lawyers, accountants, and computer programmers to pay corporate and other taxes.
Comments
Dan H
(Guest)
(Guest)
03/27/2009
Carly Hart
The Fair Tax Act will be a flat tax but on consumption instead of income. The fundamental differences between the two is that the latter will still maintain the IRS while The Fair Tax will abolish the IRS and it will restore power to the people as our founding fathers intended when they wrote the Constitution by giving people the freedom to choose how much and how often the are taxed. The income tax takes a person's hard earned money before he or she sees the paycheck. They have no choice.
Audaxetvigilans
(Guest)
(Guest)
03/26/2009
Sadie Kay, under the FairTax (fairtax.org) you could pay them what they have earned, without any income or payroll taxes deducted. The FairTax is the ONLY true reform measure that's been advanced since the income tax was instituted in 1913.
Reform? It will never happen. I make payroll for a small company. I wish I could just pay them what they have earned.
I'm in favor of tax code reform and that no one should get back more than they paid in. I think a flat tax is fair for all too. Think about it this way.... does the guy in the $90,000 Corvette not pay the same toll as the guy in the 1998 Cavalier worth $1,000 when they go through a toll booth? Or should the guy with the old car have to pay the toll, only to get it back and more later on? Food for thought anyway. But I do think that a flat tax is probably the fairest to all provided it isn't a tax that ends up making America akin to Socialist countries around the world tax-wise.
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