Wednesday, April 12, 2006

As April 15 Approaches....

Americans spend more money on tax code compliance costs, according to Robert Samuelson, than they do on electricity. While that fact would seem to be a compelling argument for reforming and simplifying the tax system, Mr. Samuelson says that it is unlikely to happen due to political constraints.

Whereas current federal income tax rates range from 10 to 35 percent, Mr. Samuelson points out that by eliminating deductions those rates could be reduced to 4 to 17 percent and be revenue neutral. However, wrangling over individual winners and losers would cripple the debate over eliminating deductions in the current tax code. Besides, maintaining high tax rates enables politicians to claim they are doing something for taxpayers by adding deductions that benefit them.

It also complicates tax compliance even further.

No comments: