Reinvent the Tax Code

With the fiscal cliff looming and tax hikes on the inevitable rise it would seem that the most rational solution would be to revise the tax code rather than raise taxes.  Now policymakers are trying to decide on whether or not they should extend 100% of the tax cuts or only 98% for a majority of Americans.

As a result of the fall elections President Obama has been insistent that we should raise taxes on the wealthiest of the American population, or those making $250,000 dollars a year or more. Republicans are completely soured by the idea of breaking their precious “no new tax” pledge to Grover Norquist. Republicans are stuck on the idea that if the wealthy pay a dime more in taxes then they have to they will stall the economy, lay off their employees, and screw the American people over in any way they can. They insist that taking away entitlements from the middle class and poor is the only way to fix this mess…even though the rich pay lower taxes than the middle class and poor and could easily afford it.

Nobody, I mean nobody, Republican or Democrat, is talking about reforming the tax code to make it fairer to the population. I mean a lot of the wealthy exploit loopholes in taxes to negate paying their fair share. This would only seem fair as the tax code is rigged so that only the very wealthiest can take full advantage of the loopholes.

Tax reform is a great option. But with a tax serviced based economy and the entire branch of the IRS being dependent on a complex tax code

Is this the right approach?

There was an attempt to fix all of these loopholes and deductions by implementing the 1986 Tax Reform Act. This act was passed in good faith but it didn’t work. Eventually the tax loopholes and deductions slowly crept in as lobbyists made their way to Capital Hill.

So what if we fixed the tax code by closing loopholes and eliminating deductions we could lower tax rates on the different income brackets. Also we would have a simpler tax code that will make taxes easier to understand and simpler to pay. Also this may encourage businesses to engage in better corporate behavior as they won’t have an incentive to exploit the tax code for their own gain. This will also lead to an overall sense of fairness amongst all individuals.

Wouldn’t this simple solution bypass all of the nagging and stonewalling in congress and make everything a bit easier for all of us? I sure would enjoy it. Wouldn’t you?