I get tired of hearing peope call for a fair tax. If they really wanted a fair tax then you should argue that everyone should get taxed on thier income at the same rate. What is more fair than everyone being treated the same? Can you imagine if you paid for anything else using the progressive tax formula; Pepsi cost $1.00 unless you make more than 100K/yr then its $1.25 but if you make less than 75K then its .80 and if you are below 30K/yr its free.
What people really mean when they talk about a fair tax system is that they want to impose thier abitrary judgment on what they consider excess income, figure how to remove said excess income, and deliver it to those whom they deem should have gotten the money in the first place.
In my opinon Congress uses the tax law to buy votes and as a result they have created a mess of a tax code. A flat tax would eliminte this but you will never see it for this very reason. Also, can you imagine how many people would be put out of work by a flat tax? IRS 10s of thousands, tax attoney’s 10’s of thousands, tax prep services, 25% of Intuit, CPA’s financial planners, I-bankers and on and on. The funny thing is these are all wasted resources that, but for our tax system, provide no economic value to our economy
Oh absolutely. Working in accounting, I’m amazed by how much of our revenue comes from tax compliance and figuring out how to get the lowest tax liability for our clients (tax planning and strategy). Nobody wants to pay any more than they have to and as long as the law allows for it…well people will take full advantage and rightfully so.
That’s why I hate people bitching about tax “loopholes.” They’re only there because congress put them in. In some cases there are legit reasons for them, but lots of time its all BS.
I used to work at an I-bank that provided advisory services to entities entering into leveraged lease transactions and other similar things called SILO and LILO transactions. Many of these deals involved finding a party that had a tax liability and hooking them up with a party that could help them offset that liability. The IRS got all upset and tried to enforse against “Abusive tax shelters” but in the end it was Congress that set these things up…mostly as an unintended consequence to some other vote buying scheme