Problems with the Flat Tax – IRS Code

Taxes have been a frequent subject of political discourse since the first tax was levied. In recent years, a flat tax system has been advocated as a solution to complex tax laws and unfair taxation. The flat tax, while appearing to be a fair and effective method for generating tax revenue, has several problems that make it a poor choice for collecting taxes.

Under a flat tax, everyone would pay the same rate on their income. Since the current US Tax Code is over 9 million words long, proponents of the flat tax argue that a flat tax would make paying taxes clearer and simpler for tax payers. With one universal rate, tax payers would not need special software or tax consultants to fill out tax forms. The flat tax takes the stress and uncertainty out of tax preparation.

Simplification may be warranted for the current tax code, but most of the language in the code is special provisions inserted to please politicians’ constituents. What would stop these provisions from creeping into the code in the future? Many special interest groups have lobbyists that go to Washington to argue that taxes are too high or a special tax provision is warranted. If this practice continues, a simplified tax code will not last long.

Under the current US tax system, income is taxed under a progressive tax, which means the tax rate is based on income. The higher the income, the higher the tax rate. Any flat tax proposal would lower the tax rate of the highest earners. Consequently, to make up for the decline in revenue from these individuals, the tax rate would need to be set at a rate that would increase taxes on everyone else.

If taxes are not raised, then spending will need to be cut. People at the lower end of the economic spectrum benefit most from government programs, so they will be the ones who will be hurt the most. Government should not be asking those most in need to do with less so those who are more fortunate can get a tax break.

A flat tax may have some advantages, but the net result will create more problems than it will solve. Since this is a country by the people and for the people, we must decide how much tax revenue is needed to meet our national goals, and the method of taxation that is fairest to all.