Nicholsclan.com : a dimension of mind...

Taxes, Bloody Taxes

It's the time of year to whine about taxes, so it seems appropriate that Alan Greenspan is having his say on the topic as well. It's hard to argue with calls for a simpler tax code.

I read with envy, the articles each year which talk about how the alternative minimum tax had to be enforced because people making 6-figure and 7-figure incomes were paying almost no tax at all. I have never even remotely figured out how to play in that league. When my tax software gets to the alternative minimum tax section, it laughs at me. Apparently, I am deduction challenged.

Perhaps this is part of why I personally favor a simpler tax code. Most of the existing loopholes don't benefit me anyway. Nor do they benefit the vast majority of Americans. I have to believe our taxes would go down if everybody paid their fair share. There might even be enough left over to patch up social security.

I'd like to see a proposal for a consumption tax similar to VATs used in Canada and most of Europe. The VATs should be waived for food, clothing, the first $150k of a primary residence, the first $20k of a primary vehicle, and other things which would keep it from becoming a regressive tax. The VAT should be combined with a flat tax on earned income (mostly implemented as a payroll deduction). This would encourage personal savings and investment. It would eliminate all the 401k, IRA, can't touch my money 'til I'm 60-something without losing big chunks of it PITA. It would eliminate filing annual tax returns for individuals. And this would have to simplify the government overhead (federal and state) required to implement the current system. Sure, this obviously requires some refinement and tweaking. But the end result should be that the tax code for either the VAT or the flat tax should be explainable on a single sheet of paper. If it takes more than that, there are too damn many loopholes.