Bobby Jindal, Donald Trump, Jeb Bush, Marco Rubio, Rand Paul, Tax

In One Image, the Case for Ripping Up the Internal Revenue Code


by Dan Mitchell

I’m happy that many of the presidential candidates are proposing big tax cuts.

Bobby Jindal and Donald Trump have large tax cuts, and Jeb Bush, Rand Paul, and Marco Rubio are proposing smaller – but still significant – reductions in the federal tax burden.

All of these plans, to be credible, should be accompanied by proposals for a sustained reduction in the burden of government spending (with real enforcement mechanisms).

But there’s something else that needs to be part of the discussion. Yes, we need tax cuts and smaller government, but we also need radical tax simplification.

Consider this depressing chart showing the number of pages in the instruction manual for the IRS’s 1040 tax form.

Or the number of sections in the tax law, which has skyrocketed in the past four decades.

I think it’s fair to say that complexity is a proxy for corruption (and even the World Bank agrees with me). Our tax code is a Byzantine mess because interest groups and lobbyists conspire with politicians to swap loopholes for campaign cash.

Some say that this problem could be solved by restricting the First Amendment and limiting people’s ability to participate in the political process. But that’s naive. So long as we have a convoluted tax code, insiders will figure out how to curry favor with the political elite and manipulate the system to their advantage.

Rather than trashing the Constitution, we should be trashing the internal revenue code.

I have lots of economic arguments for fundamental tax reform and I can wax poetic about the harm of high tax rates and double taxation of saving and investment.

But this new chart from the Tax Foundation, showing the ever-growing number of words in the tax code, is probably the single most compelling argument for a simple and fair flat tax.

Wow. It doesn’t seem to matter which party is in power. It doesn’t seem to matter who controls the White House or who controls Congress. Just as the number of pages in the tax code keeps expanding, so does the number of words.

And I think all of us know that this relentless growth in complexity is not good for ordinary taxpayers.

The only winners are the cronyists, politicians, and other insiders who get rich by using the coercive power of government.

And don’t forget that a complicated tax code means a very powerful IRS, and we’ve seen how that leads to venal corruption.

Now let’s circle back to where we started. I mentioned that many presidential candidates have proposed big tax plans that reduce the amount of money flowing to Washington. Many of those plans also include partial reforms of the tax code.

All of these components are desirable in that they both reduce the tax burden and simplify the tax system. And I could list other attractive partial reforms that are in the various tax plans.

But I can’t help but wonder why no candidate has explicitly embraced the gold standard of tax reform.

By the way, I’m ecumenical on a replacement system. There are other plans that satisfy the goals of real reform.

My only caveat, for those who advocate a national sales tax or value-added tax, is that we first need to repeal the 16th Amendment and replace it with something so ironclad that politicians could never do a bait and switch and saddle the American people with both an income tax and a consumption tax.

  • Jarhead

    The IRS could not answer why the huge penalty for being late one year in past 60 years (was having open heart surgery)…went to three (3) different CPA’s in three (3) different cities and they could not explain either – one had been doing my Tax Return for over 17 years….IN SHORT:……the IRS is too large, TOO CORRUPT to continue…defund, shut-down, eliminate the IRS ASAP. What is $harpton’s secret to NOT paying any taxes?
    Do I need to get a heavy suntan to save my retirement?

  • Clete Tacker

    No Jarhead you don’t need a heavy suntan, you just have be black, liberal, anti American, Muslim, ILLEGAL ALIEN, refuse to work, anti 2nd amendment,a “climate change”nut, homosexual, sexually gender confused, an abortion provider and a few more to avoid the irs hounding you.

  • jerry1944

    The IRS really need to be cut off and did away with. But with all the big companys that do taxes it want be . But with a tax that didn’t run over maybe 2 to 3 pages would be great for sure There are some being talked about that would be easyer

  • aaron43

    This is what happens when you have a congress which rubber stamp everything the bureaucrats propose.

  • aaron43

    There should be no tax deduction for dependents. This only punishes people who have no dependents. The dependent deduction is a rob Peter to pay Paul scenario. Single people and people with no children are not responsible for people who procreate more children. You make the money-you pay the tax.

  • aaron43

    Our tax code is set up to reward increases in human
    population growth by having dependent write-offs. This is not only foolish but
    rewards consumption of resources and cast an enormous tax burden on the ones
    which have either one or two people in the household.
    In a recent case in a
    nearby city, a person received all kinds of accolades from a local newspaper for
    riding his bicycle to work. The news article went on to state he had a wife and
    six children. This casts a carbon footprint which is four times what my wife and
    I have. It casts a carbon footprint eight times that of my son . It consumes
    educational, recreational, and other governmental resources at a rate of four to
    eight times the average household consumes. It also gives this person a $32,000
    per year dependent tax write-off for his ability to procreate more children than
    most people. Having a dependent tax deduction is a “Rob Peter to Pay Paul”
    approach to build into our tax code. We need a fair tax-you make the money-you
    pay the tax.

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