It’s Time for Flat Tax

Why Should I Bother IRS?

 By Dong Xue

Do you agree that you, me and our neighbors should pay tax based on the same rate?

Do you agree with President Obama, that “A billionaire to pay the same tax rate as a Janitor”?

Do you agree that big corporations should pay the same tax rate as your small bakery shop, regardless how expensive their tax lawyers are?

If you answered yes to these questions, then you probably would agree that it’s the time for flat tax for all Americans.

The current taxation system was in use since the establishment of this nation. It is very old, very costly and extremely complicated. How complicated is it? Well, it is just complicated enough that, for your own benefit, you should pay for a professional tax preparer to do you income taxes instead of cranking out numbers by yourself. The trouble is not just for you and me, even the former IRS commissioner Doug Shulman has said, “I find the tax code complex, so I use a preparer.”

The tax system is not just complex, it is very costly too. Put tens of thousands of tax preparers aside, the IRS along has 106000 employees and a whopping $12 billion budget. Why we need more than one hundred thousand people to calculate our taxes? Because the current tax code is 72000 pages and IRS also has 1175 forms to add to it. I am not sure about you but I haven’t read one single page of the tax code yet. No wonder there is no way that you can make your tax filings error free without professional’s helps. You think you’ve spent too much time on your tax forms and spent too much money on tax services. You are not alone. The tax preparation is a industry, and it’s a very profitable one. Each year, Americans spend 6.1 billion hours and 300 billion dollars to prepare their taxes.

Do you know that a lot of things you buy have been double or triple taxed? For example, a pack cigarette in Virginia is carrying $1.01 federal tax and $0.30 state tax (lowest in the U.S.) When you buy a pack of cigarette, you pay the federal and state government twice, because the money in your pocket has already been taxed from the income taxes. If you are a non smoker like me, you probably don’t even care how much the cigarette taxes are. But if you make regular stops at the gas stations in Virginia, you are paying, with your after tax incomes, 18.4 cents per gallon to federal and 17.5 cents to the state.

If you’ve got enough of these numbers, then it is the time to talk about flat tax. Flat tax is a very simple mechanism which use only one tax rate for everyone in every situations. It can be very dynamic too in terms of the rate adjustment according to the current economic situations. Say if we all agree on a 20% flat tax rate with the tax threshold of $15000 per person. There will be no more double tax on gas and cigarettes. The tax code can be as simple as three pages (include front and back cover.) Most of the tax calculations can be done by computers or even calculators. It will significantly reduce the IRS budget and freeing the agency’s employees to make the real meaningful contributions to the humanity instead of picking on the Tea Party tax forms.

Flat tax will not only benefit the IRS, it will simplify our lives too. Americans will no longer need to spend billions of hours and hundreds of billions of dollars on tax preparation. We can divert our time and resources to the real improvement of our lives. By the way, flat tax system is not suppose to have check returns. You either pay a fix rate of tax or you don’t pay at all (if you income is below the tax threshold.) Like anything else, flat tax has a negative side. The only negative impact is for those IRS employees whose daily job is to mail out return checks or to harass the Tea Party groups with the tax codes no one could understand, their next promotions will be postponed for a long time.