There is so much "waste motion" expended in trying to game the tax code in so many situations... what could creative people achieve in that time if they didn't spend it that way. We need a vastly simplified income tax code... I'm talking throw it all out and start from scratch. Or replace it with a national sales tax, rebating some amount to make it less regressive.
I'd like to clarify this argument. This is often a cited "alternative" A national sales tax won't be a simplified cure. Current sales tax laws issued by the states are considered fairly simple. Whatever you buy is taxed at X rate. But, from years of experience in sales tax, it is one of the most complicated areas of taxation that is constantly changing.
Ex: Have you ever wondered why supermarkets are designed the way they are? Tax is the reason why every major supermarket redesigned their layout years ago. There is a landmark case that argues whether a snickers bar is considered food or candy. Two categories with different tax rates. In the end the judge stated that candy is anything sold at the register counter and food is anything held within the isles.'
Simplification is an ideal that never pans out because we're always going to look for the loophole and its our own ingenuity that made the current IRC so complicated. Everything starts out simple until life gets a hold of it.
This implies that if you simplified the tax code, people would stop gaming it. The opposite is probably true; the simpler you made the tax code, the more accessible tax games would be to average taxpayers.
I don't agree. In order to game, there has to be different rules to take advantage of. The fewer and simpler the rules, the less you can manipulate it. Take sales taxes, for example. You can't really game them. You can evade them, but not really game them, although I suppose mail ordering things from another state could qualify, but that's an issue of jurisdiction.
> I suppose mail ordering things from another state could qualify
You're supposed to pay "use tax" on those, which for some reason is always equal to the sales tax you think you avoided. So it's still evasion rather than gaming.
Which is why you simplify it in such a way as to make tax games impossible.
Here's my favoured solution: the US Government spent $3.6 trillion this year. There are 280 million people living there. Therefore, Federal tax should be a flat $12,857 per person.
For the average income earner, this is about the same as they're already paying. For those earning more, they find they're incentivised to work harder, since every dollar they earn beyond that point is entirely their own. And for those earning less... well, it's the kick in the butt that they need to start working harder too.
"The kick in the butt they need"? Under that system there would presumably be a considerable number of people who could no longer afford to live - a family of four would be taxed over $50,000 which they might well not be able to earn, let alone earning enough more than that to pay rent and buy food. Not everyone can be an above-average earner.
I'm all for the idea of simplifying tax systems, but your idea doesn't remotely work.
