Tax Day: Let’s Cut the BS
The CBO released the following chart showing the actual tax rates, when payroll, income and excise taxes are considered (courtesy of Cato Institute):
Income is divided up into 5 segments, with the lowest 20% of earners in the first quintile, the next highest 20% of wage earners in the next quintile, etc. The beginning income for each quintile is given in this table (I have added the tax rate from the chart above for easy comparison):
| Quintile: | First | Second | Third | Fourth | Fifth |
| Household Income: | $0 | $18,370 | $35,095 | $56,222 | $88,774 |
| Tax Rate: | 4.3% | 10.2% | 14.2% | 17.6% | 25.8% |
Source: http://www.bls.gov/cex/2006/Standard/quintile.pdf
Our arcane, troublesome, loop-hole filled, 70,000 page tax code ends up as a reasonably progressive tax system when everything is averaged out.
But corrupt politicians use the tax code to reward their friends and punish their enemies, establishing much higher rates and then providing special deals and discounts. The net result is that to get the rates above, Americans spend about 200 billion a year complying with the code. The complexity is so great that even people who wrote it, like former Sen. Tom Daschle, don’t understand how to do their taxes, or what to count as income.
Would it not be easier to simply adopt those percentages above as a straight tax, no deductions and no surcharges? Why should a “favored constituent” pay less than his neighbor? Why should we take 10% from the poorest wage earners only to give them back 6% at the end of the year?
Tax simplification could start here …. five flat tax rates, with no deductions and no surcharges.
