No one likes paying taxes, but they’re the cost of “having a civilized nation”.
People ask “where’s my refund?” or “what do I owe?” but how many are asking “what am I getting for my money?”? These would be questions like “are my taxes fixing bridges in the US or in Iraq?”, or “why do they keep funding programs year after year that show no success? ” or “are my taxes helping welfare recipients get back on their feet or helping welfare cheats stay off them?”. You get the idea. Here are my criteria for taxes:
- The sole purpose of a tax is to raise revenue. “Social Engineering” is overdone.
- Revenue from a special purpose tax must be used for that purpose. If the gas tax is earmarked for highway maintenance I expect to see road crews out.
- Niche taxes that generate no significant revenue should go away. Eliminate the overhead.
- Taxes should be easy to understand and easy to file.
The last item is the biggest problem: it’s excess overhead, something I will discuss further in more detail. No one person could understand the entire tax code and various court decisions about it. The IRS has over 100,000 employees (and increasing) to keep track of it all and supposedly watch for fraud. People spend millions of dollars a year getting tax forms prepared (essentially a tax on a tax). The IRS gets all wage, pension, interest, dividend, and brokerage transaction information yet it all has to be entered again. If those are your only sources of income you should be able to file on one page. A simpler tax structure would also make it harder to cheat. The simplest income tax structure is a flat tax and I’ll make specific recommendations next.
Once individual and corporate taxes are simplified, the IRS could be downsized for real tax dollar savings. IRS employees at GS-11 and 12 grades (typical working level) earn from $60,000 to over $80,000, with supervisors earning more. Using $75,000 as an average, if IRS employment could be reduced by 25% it would save almost 2 billion dollars a year just in wages! Factoring in employee benefits, contractors, facilities maintenance, and technology the actual savings would easily double. If we could simplify (not “reform”) tax law and get the IRS out of other businesses like welfare and health care, it could be downsized by 50%. Simpler and fairer taxes, smaller and less expensive government, and less fraud sound good to me.