Enact Fundamental Tax Reform

Adopt a simple and fair single-rate tax system by scrapping the internal revenue code and replacing it with one that is no longer than 4,543 words—the length of the original Constitution.

SUMMARY

The current tax system is a perverse combination of class warfare and special interest gimmicks. With more than 70,000 pages of law and regulation, it is an anchor weighing down the American economy. High tax rates, corrupt loopholes, and pervasive double taxation of saving and investment are a recipe for reducing American competitiveness. To make America more prosperous, the internal revenue code should be replaced by a flat tax or a sales tax, both of which are based on the notion that laws should apply equally to all people. Moreover, people are rewarded for creating jobs and wealth with real tax reform, rather than rewarded for having more lawyers, lobbyists, and accountants. Real tax reform also means a low tax rate to make America a vibrant competitor in the global economy.

But it is also important to identify what is not real tax reform. Under no circumstances should politicians be allowed to adopt a new tax – such as a European-style value-added tax – without first completely repealing all income taxes. Politicians should not be allowed to pull a bait-and-switch that will finance a much bigger burden of government. Politicians have been swapping loopholes for campaign cash since the income tax was created in 1913. It’s time to end the scam.

~ Dan Mitchell, Ph.D. Cato Institute