Monday's columnist, Travis Hornsby, was completely correct about the necessity of a simple tax code.
However, the reason we have a complex tax code is not because of some random or complex force but because it lacks a trait it should absolutely possess - anonymity.
Our tax code is so complicated because of lobbying. The tax rate isn't the same for everyone, so people (corporations and interest groups) pay to get their own exceptions to reduce their tax burden.
What we should have is this: a flat, consumption-based tax with an annual allowance payment.
Sound complicated?
It really isn't. If the tax code suggested by the aforementioned Republican presidential hopeful Jon Huntsman would give a college-educated American 10 minutes, an explanation would take less than 10 seconds.
Under this consumption-based tax plan, you (as an American citizen) receive a check every year for a given amount. If you wanted to keep the same number of Americans currently paying taxes, that would be approximately $8,000, to offset the taxes paid on basic expenses.
Whether you're completely impoverished or a billionaire, the allowance payment is the same. Then, every time you make a purchase you pay a rate (ideally around 17 percent) as a federal sales tax.
That's it. No corporate tax, no IRS, no payroll tax, no write-offs, just 17 cents on a dollar, point of sale. No merchant is going to break the law to save General Electric 17 percent on a purchase.
Lobbying for special tax treatment is completely ineffective in an anonymous tax system. Combined with ending all corporate welfare and federal subsidies, we would finally have a level playing field.
Companies would come (back) to the U.S. just for the simplicity of the tax process, and the economic growth resulting would be staggering.
Consumer confidence would greatly improve when Americans could spend the 6.1 billion hours we spend per year doing taxes (not to mention the hours worrying about them) doing something productive.
As for accountants? There's a lot more money to be made working for a smart, capable and analytically talented individual on improving a business than doing taxes for one.
