April 15, 1998 | Executive Summary on Taxes
Last year, The Heritage Foundation released a publication, "577,951,692,634 Reasons...And Counting: Why a Flat Tax Is Needed to Reform the IRS." Since that time, calls to reform the Internal Revenue Service have led to unprecedented hearings in Congress and outcry among the public. In 1997, however, Congress moved away from reform and approved a tax bill that adds even more complexity to the tax code. Because of that bill, as well as Heritage's continued research into the myriad nooks and crannies of the current tax code, 159,783,249,224 new reasons that the Internal Revenue Code should be replaced with a flat tax have come to light, bringing the total number of reasons to 737,734,941,858.
A 1997 national voter survey by the Polling Company finds that the majority of respondents would prefer to undergo a root canal than be audited by the Internal Revenue Service (IRS). And a 1990 People magazine survey finds that the most frightening words people could imagine hearing when they answer the phone are "This is the IRS calling." Although Americans have every right to be upset by an oppressive tax system, their anger should not be directed at the IRS. The vast majority of problems with the current tax system are the result of 85 years of bad tax policy.
The way to reduce the public's intense aversion to the IRS is to enact a flat tax. By wiping out all the complicated, obscure, and convoluted provisions of the current tax code, a flat tax would reduce compliance costs and ease the uncertainty and anguish that make April 15 everyone's least favorite day of the year. The following numbers provide the evidence:
$34,672 = The difference in liability between the highest and lowest incorrect answers among the 46 professionals who failed to calculate the correct tax liability of Money magazine's hypothetical family.
$610 = The amount by which the hypothetical family would have overpaid its 1997 taxes if it had used the answer that came closest to the actual tax liability (assuming, of course, that Money magazine's expert had filled out the tax return correctly).
The only way to address these problems is fundamental reform. A flat tax that taxes all income--but only one time and at one low rate--will reduce the power of the IRS dramatically by eliminating the vast majority of possible conflicts. In a system that asked individuals to provide only their total income and the size of their families, much of the fear, frustration, and uncertainty surrounding the payment of taxes would disappear.
Daniel J. Mitchell, Ph.D., is McKenna Senior Fellow in Political Economy at The Heritage Foundation.