I’ve always found arguing about one tiny aspect of the tax code to be pretty boring. In the next few weeks, the talking heads are going to be at it again, debating the newly proposed tweaks to the current tax code.
If you could start from sctratch, what would the ideal tax code look like and why? Here’s my take:
Tax code purpose: To raise money for the functions of gov’t. AND NOTHING ELSE (i.e., not for social engineering).
General characteristics: Keep it fair, in that all participate. Special interests are not favored. You shouldn’t need an accountant or a lawyer to figure your tax. And it should be VERY DIFFICULT to change (how are people or corporations supposed to plan when you never know from year to year what taxes you are going to have to deal with).
I’ve always like the Flat Tax proposal, something like that proposed by Dick Army:
http://flattax.house.gov/proposal/flat-sum.asp
"The Armey-Shelby flat tax (H.R. 1040) scraps the entire income tax code and replaces it with a flat-rate income tax that treats all Americans the same… The flat rate would be phased-in over a three year period, with a 19 percent rate for the first two years and a 17 percent rate for subsequent years.
Individuals and businesses would pay the same rate. The plan eliminates all deductions and credits. The only income not subject to tax would be a generous personal exemption that every American would receive. For a family of four, the first $35,400 in income would be exempt from tax. There are no breaks for special interests. No loopholes for powerful lobbies. Just a simple tax system that treats every American the same."
The idea of a national sales tax (in lieu of an income tax) also seems to be reasonable, but might lend itself to creating an undergroud economy of smuggling and all the crime associated with it.