Summary of the Problem

Taxes will always be a byproduct of a civil society, but it is government’s responsibility to make sure they are as reasonable, fair, simple and logical as possible. America’s income tax structure fails by every measure. Beyond its expense to taxpayers, which is a direct result of the staggering growth in the size of the federal budget in recent years, the income tax is fundamentally flawed. The current tax code is unfair, complex and intrusive. It penalizes work and success, rewards idleness, discriminates against certain individuals while favoring others, manipulates the choices Americans make and enables lawmakers to reward supporters and donors with preferential treatment. The primary function of taxation, obviously, is to collect revenue to fund the operation of government. The U.S. tax code has come to serve a second purpose, one that flies in the face of limited government and equality. The federal government injects loopholes, deductions and credits into the tax code to manipulate the decisions and habits of Americans. Instead of using the tax code to dictate what taxpayers do, taxes should simply be made lower and more equitable for all Americans.

Key Points

  • Income taxes were unconstitutional until 1913, when the 16th Amendment was ratified.
  • The three primary problems with the tax code are tax fairness, tax complexity, and social engineering through the tax code.
  • In 2008, the top 1% of earners paid 38% of the personal income tax. The top 1% includes anyone making over $380,354 this year. Trying to increase taxes on the “top 1%” will hurt small business owners, delaying economic growth and job creation.
  • The complexity of the tax code costs taxpayers an estimated $262.3 billion in lost productivity and tax preparation-related activities and items each year.
  • The two most serious tax reform ideas are the flat tax and the fair tax.
  • We should also end the automatic withholding system that gives the government access to workers’ earnings before they even receive their own paychecks. It masks the economic pain of writing checks to the government every month, allowing the government to grow bloated in size and scope.

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