Death and taxes are certainties in life. By Tax Day each year, millions of Americans may view death as preferable to the mind-numbing complexities of adjustments, credits and deductions. U.S. tax code is absurd and inequitable, only benefiting the federal government’s addiction to deficit spending. We should replace the system with a flat income tax. That would give taxpayers more zest for life each April and limit government as the founders intended.
Unfair and heavy taxation was a primary cause for the American War for Independence. The founders recognized the need for the treasury to collect money, but they were careful about the power to tax. They didn’t want a national legislature to burden the states unjustly. That’s why the Constitution prohibited a federal income tax by stipulating that direct taxes on citizens could only be assessed in proportion to the population of each State.
Despite the rule of law, Congress passed the Revenue Act of 1861 during the Civil War. There were so many problems with the law that it was repealed in 1872. The federal government again enacted a nationwide income tax in 1894. The U.S. Supreme Court struck the law down the next year, declaring that an unapportioned income tax was unconstitutional. This inconvenient truth was ultimately bypassed by changing the Constitution of the United States.
The 16th Amendment to the Constitution was ratified in 1913. It states, “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.” Congress was granted a new power over the people.
Today federal confiscatory policy goes far beyond income tax on salaries and wages. Government double-dips by taxing subsequent capital gains on investments and interest earned on savings. When assets are ultimately passed from one generation to the next through inheritance, the “death tax” ensures government takes some more.
American citizens and businesses are also burdened with payroll taxes directed to Social Security, Medicare and Medicaid. Then there’s the parallel tax known as the Alternative Minimum Tax, which results in a higher tax rate for an increasing number of middle class families. Each year, Congress twists the tax code into more knots with politically motivated loopholes, credits, exemptions and deductions.
An income tax was a bad choice from the start and it’s gotten worse with time. The corporate tax rate of 35 percent on American businesses is the highest in the industrialized world. A typical working family fares no better with an income tax rate between 15 percent and 25 percent, as well as payroll taxes of about 15 percent. At the same time, myriad credits and deductions allow a growing percentage of low income earners to receive money from the government instead of paying any income tax.
The existing tax system is illogical and unfair. It damages economic vitality within our borders and hinders our ability to compete in the global marketplace. U.S. tax code benefits only Washington by providing cover for runaway spending. People who aren’t footing the bill don’t care. Those citizens who do pay, can’t decipher the link between their tax dollars and government expenditures.
It’s time to scrap the tax code in the United States and implement a flat tax. Let’s get rid of every major tax collected by the federal government (e.g., payroll taxes and the death tax) and implement a single, simple tax rate of 28 percent on income for every household and business. All the loopholes, deductions, and exemptions would go away too.
Research by experts shows this straight-forward approach would collect the same amount of revenue as the current system. A flat tax also stimulates economic growth by removing excessive burdens on job creators. American businesses would be more competitive in world markets, which results in higher wages for workers here at home.
More important, when each American pays taxes equitable with his or her neighbor, the perception of “free” government services evaporates. Today the U.S. government spends close to twice as much as it collects with taxes. With a flat tax, every citizen will demand that the credit card be taken away from Washington, D.C. Of course, the politicians and bureaucrats probably prefer death to that outcome.
James D. Kellogg is a water resource engineer and the author of “Radical Action: A Colt Kelley Thriller”. Look for it on amazon.com and visit jamesdkellogg.com or email firstname.lastname@example.org.