Thursday, November 19, 2009

Is simplicity a partisan issue?

Who is against simplicity? Isn't it a generally accepted axiom that simplicity is preferred over complexity? There's even an acronym for it: KISS, Keep It Simple Stupid. I think simplicity is great and I can't fathom why promoting simplicity should be a partisan issue. Below are some simple questions that should have you scratching your head wondering: why is this so complex?

Why do we pay taxes?
-To pay for government services. Sounds simple enough.

Who should pay taxes and how much should each person pay?
-It appears that we all believe in a progressive tax system. Those with more ought to pay more.

So why do we have so many different taxes?
-We have payroll taxes, income taxes, sales taxes, excise taxes, corporate taxes, captital gains taxes, death taxes and probably many more I know noting about but unwittingly pay. It almost seems as if someone, somewhere, has deliberatly made the tax code ridicuously complicated.

Here's a crazy idea, let's have a stupidly simple (some might even call it genius) tax system. We have a single tax on individual income that is progressive. It generates revenue in the simplest possible form and soaks the the rich pay their fair share. That's it, no corporate income taxes, no federal sales taxes, no taxes for the privilege of dying, just one fat tax which does exactly what we need it to. Generate revenue to pay for government services. Who's against that and why?


seeligd said...

Seems reasonable. I'd offer a gas tax (ie: pigovian taxes in general) as a reasonable additional tax. While you're at it, consider how many taxes aren't being paid because of our hodgepodge of incentives and excemptions. Google 'percentage of people with no tax liability'. Quite the opposite of a simple system, too, I'd say.

Adam Freund said...

I think a tax on externalities is fine. I think you need to be very cautious in utilizing them because they can become arbitrary. As a safeguard, I would suggest that any revenue generated from a pigovian tax be redistributed to the population in general so that politicians can't abuse it.

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