"As Washington scrambles to find the 'just right' package that will allow enough of Congress to vote for an increase in the debt ceiling, some leaders have asked those Americans who make more money to be willing to pay more taxes, calling for fairness to be reflected in the tax code. However, new research from Bruce Yandle finds that from 1979 to 2007 the individual income tax burden on the...
Quotes on Can the Tax Code Be Less Taxing?
"No man should receive a dollar unless that dollar has been fairly earned. Every dollar received should represent a dollar's worth of service rendered-not gambling in stocks, but service rendered. The really big fortune, the swollen fortune, by the mere fact of its size, acquires qualities which differentiate it in kind as well as in degree from what is possessed by men of relatively small means. Therefore, I believe in a graduated income tax on big fortunes, and in another tax which is far more easily collected and far more effective-a graduated inheritance tax on big fortunes...."
"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
"It seems that the conclusion we must draw from this is that rates of taxation in the upper part of the progressive scale have very little to do with the benefit the resulting redistribution of income confers on the lower income classes or the relief in the tax burden they actually obtain. They must be regarded as purely punitive rates, as an expression of the dislike of the majority of the idea that anybody should enjoy the command of such large incomes."
"It is now easy to see the enthusiasm of the federal government and its economic advisers for the new scheme for a VAT. It allows the government to extract many more funds from the public — to bring about higher prices, lower production, and lower incomes — and yet totally escape the blame, which can easily be loaded on business, unions, or the consumer as the particular administration sees fit.
The VAT is, in short, a looming gigantic swindle upon the American public, and it is therefore vitally important that it not pass. For if it does, the encroaching menace of Big Government will get another, and prolonged, lease on life."
"Complexity is a hidden tax amounting to more than $100 billion. This is the cost of tax preparation, lawyers, accountants, and other resources used to comply with the Internal Revenue Code. The Internal Revenue Service even admits that the current tax code requires taxpayers to devote 6.6 billion hours each year to their tax returns."
"The Federal income tax is a complete mess. It's not efficient. It's not fair. It's not simple. It's not comprehensible. It fosters tax avoidance and cheating. It costs billions of dollars to administer. It costs taxpayers billions of dollars in time spent filling out tax forms and other forms of compliance. It costs the economy billions of dollars in lost output of goods and services from investments being made for tax rather than for economic purposes. It involves tens of thousands of lawyers and lobbyists getting tax benefits for their clients instead of performing productive work. It can't find ten serious economists to defend it. It is not worth saving."
"We should never go down the path of a value-added tax or a national sales tax unless we first get rid of the sixteenth amendment, because I don't trust the people here in Washington. They would love to have two different tax systems."
"[U]nless you get rid of the 16th Amendment to the Constitution, which allows for the taxation of incomes by the federal government, the odds are very, very high … that at the end of the day you're gonna end up with a fair tax, or a national retail sales tax, on top of the income tax. And so I think that if the fair tax people are serious, they should put all their efforts into repealing the 16th Amendment, and if they could do that, it would clearly show that there was political support for their reform proposal and we could move forward."
"The mode of taxation is, in fact, quite as important as the amount. As a small burden badly placed may distress a horse that could carry with ease a much larger one properly adjusted, so a people may be impoverished and their power of producing wealth destroyed by taxation, which, if levied in any other way, could be borne with ease."
"Two considerations should give us pause before jumping on the flat-tax bandwagon. The first is the disruptive effect of eliminating deductions, credits and exclusions that benefit the middle class as well as the rich and that play important roles in our lives—pension contributions, employer-provided healthcare, and deductions for mortgage interest, property taxes, and charitable contributions that support everything from soup kitchens to education to the arts. Second is the role of our mildly progressive federal income tax in offsetting regressive taxes elsewhere in the system."
"The bottom line, from both political perspectives, is that a VAT is neither blessed nor evil. It is a tool. We can use it to advance a larger government, a more efficient tax system or some combination of the two."
"Critics say such tax breaks often provide bigger subsidies to people with higher incomes. The tax deduction for mortgage interest, for example, offers bigger benefits to people with more expensive houses. Almost two-thirds of all Americans, most on the middle and the lower rungs of the income ladder, cannot even take a deduction for mortgage interest because they don't itemize their taxes."
"We estimate that the annual compliance cost of the U.S. tax code for income taxes alone is approximately $431.1 billion.* These annual expenditures could be directed toward productive activities, but are currently being wasted. The growing tax complexity problem in the United States is literally 'de-stimulating' the economy at the same time that the government has spent hundreds of billions of dollars in an attempt to stimulate the economy...."
"What happens when you raise rates for higher income people, they reduce their productive activities, like working and investing and starting businesses, and they increase their unproductive activities, like tax avoidance and tax evasion. So governments really shoot themselves in the foot if they raise rates too much."
"'The fairness argument is largely political,' said Yandle. 'The majority of people aren’t rich, so the majority of voters aren’t rich. But while the fairness is an important issue and one that must be addressed by wise politicians, it doesn’t get you very far in looking for more revenues and lower spending.'
Yandle says that attempting to make a fair tax code doesn’t help to close the deficit. 'Raising taxes on the rich doesn't necessarily generate more revenue,' he said. 'Wealthy investors have too many ways to escape. With higher tax rates, less investment will follow, and more will be spent in finding ways to avoid taxes. If the goal is more revenue, then tax rates should be reduced and loopholes closed.'"
"Some of the wealthiest Americans can hire lawyers and accountants to take advantage of tax expenditures and loopholes that enable them to pay a lower share of their income in taxes than average Americans."
"Congress loves to provide incentives using the tax code. Any problem it wants to solve, use the tax code. Any behavior it wants to change, use the tax code. Any industry it wants to prop up or diminish, use the tax code. President Obama's stimulus package which passed early in his presidency added 300 pages to the tax code. Manipulation of the tax code has simply become de facto government regulation. This is not a new practice for Congress or the President. Ever since the 16th Amendment, the federal government has increasingly used income taxes (on individuals and businesses) to regulate, but the ever-increasing complexity created by using the tax code for basic policy purposes has reached a critical stage."
"Revenue collected by the government through taxes prevents economic transactions from occurring. The economic size of these purchases and business deals that do not occur is larger than the revenues collected by the government."