The current income tax law is a graduated income tax. The rates increase in various intervals as your income increases. The idea of the ìflat taxî is that all taxpayers will pay the same percentage of taxes. The concept is simple.
Seems fair right?
Let us explain why this is not the way to go. Picture a politician standing up on a table or a small stage, his suit coat off, his tie askew, shouting into the microphone, “What we need is a flat tax! Then we can abolish the IRS!” The crowd shouts and hoots and claps as he points his finger into the air and has a self-righteous moment in the limelight. Itís the kind of idea that makes a great stump speech, but isnít very realistic in practice. In fact, 20 minutes after the citizens get home and sit down in their comfy chairs,they realize, “Hey, that canít work!” Remember, whatever becomes of the tax code, there will always be collection agents. The IRS is not going to be eliminated. It makes good theater, but maybe we should take a deeper look. First of all, maybe we should look at the current income tax structure. Is it burdensome? YES! Could it be simpler? YES! Is it fair???? The current income tax rates and code can be rather difficult to understand, but there are deeper reasons for why the code is the way it is. The income tax code serves to do a lot more than collecting taxes for the government. The tax code has many social goals that benefit the people. For example, home ownership means you most likely will get to deduct the mortgage interest and property taxes. There is no deduction for credit card interest, and the government wants to encourage home ownership and discourage personal debt. Even so, personal debt is very high. The code provides for deductions for state and local taxes, union dues, tax preparation fees, and contributions to non-profit organizations such as churches and charities. Changing the tax laws might seriously cripple many of these organizations. Let’s say that the flat tax does indeed became the law of the land. My question is, “Who goes to work the next day in Washington, DC?î The answer is, the House, the Senate, the President, and the lobbyists. Now, a lobbyist comes to a congressman’s office from Ohio and offers to build an office building in the congressman’s district that will employ 500 people in high paying jobs. BUT, he needs a law inserted into the tax code so that he will have an incentive to open this business. The congressman says, “Let’s go see Senator X and get his support.” Then, the senator and the representative go to their colleagues and find that they are experiencing the very same things in their districts, and they are all hunting for votes. The long and the short of it are, that the FLAT TAX wouldn’t last more than a few days. The Flat Tax. A simple idea whose time should never come.
Then what is the solution to the complex income tax code?
We will leave that to those who write the laws. Our companyís expertise is in interpreting the U.S. Income Tax Code. We are ready to serve your income tax needs at reasonable prices.
Contact Shank and Company to schedule YOUR appointment.