If we acknowledge the way we currently collect federal taxes as both inefficient and unfair, what can we do differently to correct it? The strength of a flat tax is in its simplicity. I don't need fancy jargon or a bunch of obscure numbers to explain it, nor do I need to go too far into a debate to convince a person with half a brain that it is fair to all Americans. It's a concept so easy and so fundamentally better than the current options that only politicians would be incompetent enough to not enact it.
A flat tax would simplify the system by narrowing the number of tax brackets to only one, or maybe even two, segments. Everyone within a bracket pays the same low rate often cited in the 10 to 20 percent range. The current progressive system is so broken that only half of Americans pay all the taxes collected. Since most college educated Americans fall in the upper half, this should come across to you as quite unfair. If we are all Americans or guests working in this country, is it not understandable that all of us with some type of income should pay a small percentage into the system for our mutual benefits and security?
Opponents claim this is some type of hypocrisy, raising taxes on millions of people when conservatives so often argue against such a measure. How is it hypocritical when these people don't pay into the system at all? How have they earned the benefits that citizenship and residency provide? Conservatives try to protect those who have paid their dues in a broken system, and by enacting a flat tax we return the power back to the people and take it away from the politicians in Washington, D.C.
By the same token, opponents bent on class warfare and ignorance claim the flat tax is a big tax cut for the wealthy, saying, "they are not going to be paying their fair share!" Fair should not be based on income brackets, but on the amount of physical dollars individuals have to pay in. That is why percentages are good, because a greater pool of taxable wealth means the physical dollar amount of the tax contribution grows. If Bill Gates and Joe Blow are both paying in 15 percent, Gates is obviously going to be paying in much more than Joe, but it is still fair to both. If Gates and Joe are 100 percent American, but Gates pays in 40 percent and Joe pays in zero percent, how is that justified? If Joe is poor and Gates wants to give him some of his wealth out of charity or create a job for him, there is nothing in the law saying he can't. In fact, we should have a system that encourages him to do just that.
The biggest misconception people have about government is that it's somehow a charity, that we can somehow correct societal wrongs through government. No, we correct societal wrongs by creating systems that reward good behavior on an individual level, not punishing success. Bill Gates can certainly do a lot more good in the world by giving money to the Gates Foundation than to the federal government. All of us can do a lot more for the world by keeping our money and giving it to charity or by buying useful products and services that keep people employed. A flat tax lets all of us keep more of our money and spend it how we like.
Tax evasion and fraud are big problems in today's progressive system. Legal loopholes are big paydays for those who can find them. We should ask the question, "why do people cheat?" People cheat because it is perceived as easier or more advantageous than being legitimate. That is what this current system has created — a culture of cheating. A flat tax will bring billions of dollars back into legitimate channels by closing all loopholes and exemptions, discouraging off-shore tax evasion and making people realize it's competitive and easier to keep their money in the States. Our broken tax code makes people hate dealing with tax filing; it has made many honest people seek ways to break the law to get an edge, and it is large factor in our uncompetitive business landscape and further decline in world history.
Simplifying the tax code will not only generate more tax revenue in the long term, but will create short-term taxpayer savings in numerous areas, most of all in the dreaded IRS. Which is better: keeping more of your hard-earned money up front or giving it to the government and hoping that you may get a refund later? These refunds aren't free to issue. IRS employees are paid by the tax payers to keep track of this mountain of data and federal mail is used to deliver these checks to you. This whole process runs in the billions of dollars every year, when we could see huge savings by not having to engage in it at all. Not to mention IRS agents, tax specialists and taxpayers alike will save with a simplified taxation process.
Businesses will be able to thrive better in an environment of simple taxation, generating more wealth for the U.S. and correcting our federal deficit. Opponents of the flat tax are right — a lower rate should bring in less tax revenue. However, a more competitive America that results from lower rates will offset all of the negatives and bring in more tax revenue than has ever been seen, all while putting the tax burden on Americans at an all-time low.
Occupy D.C. and pass a flat tax. We are the 100 percent.
Mark Easley is a senior computer science major. He can be contacted at measley@nd.edu
The views expressed in this column are those of the author and not necessarily those of The Observer.
