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Flat Tax Essay Research Paper Dear Colleague

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Flat Tax Essay, Research Paper

Dear Colleague,

Of all the shortcomings of the current income tax system, the costs associated with the code’s complexity are certainly the most wasteful and unnecessary.

The compliance burden of our complex tax code is truly mind boggling. Americans spend 5.4 billion man hours figuring out the tax law. That is the equivalent of nearly three million people working full time, year round just to comply with the tax system. That’s more man-hours than it takes to build every car, truck, and van manufactured in the U.S. each year. The Internal Revenue Service sends out eight billion pages of forms and instructions every year, which if you laid them end to end, would stretch 28 times the circumference of the earth. Just the compliance cost of today’s tax code adds up to $232 billion, according to James L. Payne. “That’s more man-hours than it takes to build every car, truck, and van manufactured in the U.S. each year.”

There is another cost, which, while impossible to quantify, is a cost nonetheless. It is the anxiety the tax code causes. Because so many Americans must keep detailed records to prepare their tax returns, the complexity of the tax code makes April 15th a day Americans dread. Perhaps worst of all, even after sending their return and check to the IRS, many Americans worry that despite their best effort they may not have completed their tax return correctly.

It doesn’t need to be this way. The flat tax I have proposed would be so simple, Americans could file their taxes on a return the size of a postcard. Today’s 480 forms would be replaced with just two — one for wage income and the other for business income. According to the Tax Foundation, the flat tax would cut compliance costs by 94 percent. That means tens if not hundreds of billions of dollars that are wasted today could be put to productive use and immediately raise Americans’ living standards.