The value of Federal tax credits and other breaks topped a trillion dollars, almost equaling the tax revenue received, according to an excellent article in the Washington Post.
Only 8% of the total went to corporations. Corporate jet benefits were a mere .03% slice.
I don’t like corporate jet write-offs any more than most people, but political rhetoric focused on relatively insignificant inequities in the tax code while ignoring the larger scope of the deficit’s origin is nothing more than pandering.
Obama and Congress should be ashamed; we the citizens should admonish the lot of our officials and demand a real solution for the insanity that masquerades for tax policy. It is time to consider a flat tax.
The concept of a flat tax can mean many things to many people. In truth, no proponent of such a tax has ever proposed one that is purely flat.
I support a flat tax that kicks in above a poverty level. People can argue over what that level should be. Currently, it is defined as $22,350 for a family of four – way too low in the view of most people. The poverty benchmark for applying a flat rate should be higher, but it must still be set to a level low enough to incent people to look for work.
There would be no deductions, exclusions or credits – period. They have become nothing more than tools to buy votes. The economic consequences of all of this well-intentioned largesse have been disastrous. The devastation in the real estate market is the most striking example…and the one with the most pervasive impact.
Everyone above the assumed poverty benchmark would pay the same rate for all sources of income: capital gains, social security, wages, interest – you name it.
Corporate income taxes should be replaced by gross receipts taxes set a low enough level to be factored into pricing strategies that do not constrict consumer demand.
It would no longer cost taxpayers to fork out $229 to prepare a 1040 with a Schedule A (more if other forms are required) and eliminate almost all of the 4 billion hours of time spent on preparing returns, not to mention reducing anxiety – the healthcare price of which is incalculable.
Corporate tax departments could be reduced, if not entirely replaced in smaller firms by less costly general accounting personnel.
The IRS could devote almost all of its audit and enforcement resources in smoking out tax evaders, including those in the cash-driven underground economy. It would also eliminate most simple calculation errors resulting from complex rules.
The GAO issued a report in June 2011 that stated the tax gap for 2001 (that’s ten years ago) was $345 billion. The gap is defined as the difference between what is owed and paid on time. God knows what the price tag is as of the current year – and He or She does not work for the government.
Nina Olson, the National Taxpayer Advocate and a guest at one of the Cal Society of CPAs annual tax nights, states: “The causes of noncompliance vary, but simplifying the tax code could address many of them.”
What can be more simple than a flat tax?