Let’s Hear it for the Flat Tax Do you think we should abolish the Internal Revenue Service? If you were to ask your family, friends and neighbors, you would get a resounding YES! That was my outcome when I, as an income tax preparer, surveyed my clients as well as my family, friends and neighbors. The comments ran from “It’s too complex”, “It’s unfair” to “They are too powerful”. Not one person was happy with the tax code as it currently stands. That is not to say people do not want to pay their fair share. They just want an easier, fairer way to do it. To prove the complexity of the IRS Code, Money Magazine asked fifty “tax experts” to figure hypothetical family’s tax liability each year from 1988 through 1992 and published the results in their March issues. The best year’s result was 1990 when only 48 of the responses were incorrect. If a tax expert could not figure the liability properly how can anyone expect the everyday taxpayer to do it? The solution quite possibly is the Flat Tax.What will the Flat Tax do for us? The current proposed tax rate of 17% for all income will be more fair. It is much simpler; the tax return for an individual and a business will be postcard size both having only ten lines on them. The proposed flat tax eliminates the tax at a personal level for interest, dividends and capital gains as well as allowing businesses to deduct capital assets in the year of purchase. Currently a capital asset is expensed by taking depreciation over the useful life of the item. Many economists believe these features in the flat tax will stimulate economic growth. According to the Bureau of National Affairs Banking Report “Some 55 percent of the 156 analysts polled by the National Association of Business Economist think the economy would benefit from some type of flat tax…” Compliance is the final benefit of the flat ...
