Flat Tax vs. Fair Tax: The Debate

This is May 13th, right?

I hope it is not out of order for me to add a different idea that is outside the flat v.s. fair debate. I think there are more ideas than simply these two taxation models. I still strongly support what Ross Perot was saying in his antiqued position statement. I reject the assumption that all ideas have been considered and narrowed down to a choice between flat and fair tax. I don't know how that conclusion was reached and suspect this debate is confined within the conventional wisdom as offered to us by the media.

'96 Position Statement by Ross Perot

"Now it is the pleasure and the pride of every American to ask, "What farmer, what mechanic, what laborer, ever sees a tax gatherer of the United States?"
-Thomas Jefferson

I want to end the Internal Revenue Service as we know it by developing a more fair and more simple tax system.

When the IRS was formed in 1913, each American paid only $6.75 per year in federal taxes, the entire tax code was only 16 pages long, and it had a 400-page explanation that was attached. Federal taxes today are $5,700 per year for each American, and the tax code has grown from 16 pages to 3,000 pages. In addition, the IRS regulations have grown to 80,000 pages.

Most of these regulations have been created on behalf the special interests who constantly seek tax breaks. The tax code is the single greatest source of lobbying activity in Washington, D.C. Even the $1.5 trillion that Congress spends annually does not attract as much lobbying attention as the tax code.

Because of this enourmous and complex tax code, the Internal Revenue Service now has 110,000 employees and an annual budget of $7 billion. In 1994, the IRS processed two billion documents, including 200 million tax returns. It is estimated thaat Americans spend five billion man-hours each year filling out taxes. Why are we wasting our precious time and money on the most complicated tax code in the world when it doesn't even work?

As President, I will get rid of the IRS and the tax code, and replace them with a fair, paperless, modern system that will raise the revenues necessary to operate this great country. We will end the annual panic, headaches and expense of filing tax returns.

The first step in reforming our tax system is to define the problems with the current system. The best way to define our tax problem is to bring together the leading authorities on taxes from the private and public sector. The resources and the database of the Internal Revenue Service must be used along with many of the talented men and women who work for the IRS. We would also identify people in the private sector who are leading authorities on computer modeling and analysis. The computer will have the same role in reforming our tax system that a wind tunnel has in creating a new airplane.

We will then study each of the proposed tax systems, including the flat tax, the consumption tax, the national sales tax, the value-added tax, the financial transactions tax, and any other viable proposal. Then computer models and the IRS databases will be used to carefully, thoughtfully and rationally model each of the proposed tax systems. The end result may determine the tax payments each citizen will have to pay; whether it is vulnerable to economic fluctuations; and many other variables.

Upon completion of this study, we will present these plans to the American people in plain language, both in writing and on television, in order to develop a consensus about the tax plan. Each citizen will know the personal impact of the tax plans. Before the implementation of any new tax system, I will ask each of the computer science departments in our major universities to re-analyze all of the data to see if they can determine any unaticipated, adverse side effects that may have been missed in the original study.

We will work with Congress to pass the necessary legislation, including constitutional amendments, if necessary. Finally, the owners of the country - the people - should vote on any future tax increases in order to put discipline on federal spending.

As a final result, we will have a new tax system that works properly and will benefit every American. Along with reforming entitlements and cutting government waste, our new tax system will balance our budget and enable us to begin paying down our $5.1 trillion dollar national debt.

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