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...."

Theodore Roosevelt
TeachingAmericanHistory.org
1910
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"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."

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Library Topic: Growth of Government

"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."

F. A. Hayek
The Center for Economic Liberty
1956
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"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."

Murray N. Rothbard
Human Events
Ludwig von Mises Institute
March 11, 1972
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"Today the Internal Revenue code constitutes cruel and unusual punishment. A flat tax would be an enormous step forward."

Senator Arlen Specter
C-SPAN
May 14, 2003
Library Topic

"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."

Daniel J. Mitchell
Backgrounder, No. 1866
The Heritage Foundation
July 7, 2005
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"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."

Robert E. Hall
Alvin Rabushka
Hoover Institution Press
April 2, 2007
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"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."

Dan Mitchell
Washington Journal
C-Span
December 12, 2007
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"[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."

Bruce Bartlett
Washington Journal
C-Span
December 12, 2007
Library Topic

"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."

Henry George
Tax Foundation
2008
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"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."

Holley Ulbrich
U.S. News and World Report
April 12, 2010
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"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."

N. Gregory Mankiw
The New York Times
April 30, 2010
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"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."

Edmund L. Andrews
Lori Montgomery
The Washington Post
May 2, 2010
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"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...."

John Childs
Dr. Arthur B. Laffer
Wayne H. Winegarden
The Laffer Center
April 2011
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"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."

Chris Edwards
CBS News
April 17, 2011
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"'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.'"

Bruce Yandle
Mercatus Center at George Mason University
July 28, 2011
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"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."

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"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."

Dr. Joseph M. Ellis
Dr. Peter M. Frank
Fellow Policy Review
The Jesse Helms Center
September 2012
Library Topic

"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."

Jason J. Fichtner
Jacob M. Feldman
Mercatus Center at George Mason University
May 20, 2013
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Commentary or Blog Post

"The most basic goal of tax policy is to raise enough revenue to meet the government’s spending requirements with the least impact on market behavior. The United States’ tax code has long failed to meet this aim: by severely distorting market decisions and the allocation of resources, it impedes both potential economic growth and potential tax revenue."

"Bloomberg Businessweek's Carol Matlack reports that several central and eastern European countries that adopted flat-rate income taxes over the last two decades are now abandoning them or considering doing so. The Czech Republic and Slovakia switched last year to progressive systems, where rates get higher as incomes rise. Now, Bulgaria is considering a similar move."

"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...

This article is Rabushka and Hall's original flat tax proposal. It emphasizes the simplicity of the tax by showing a tax return that would fit on the back of a postcard, an image that quickly became the symbol of the movement.

"With the April 17 deadline approaching, USA TODAY decided to test this theory by asking three veteran tax pros — two enrolled agents and one certified public accountant — to prepare a tax return for a hypothetical family, the Baileys."

"The federal tax system is 'totally broken,' says Tom Brown, a representative of Georgia for FairTax. Brown wants to replace the entire federal tax system with the 'fair tax,' a national sales tax. He spoke on the topic Tuesday at a meeting of the League of Women Voters of the Dalton Area. 'There would be no loopholes, no deductions, no exemptions. It would basically get rid of the Internal Revenue Service,' Brown said. He said a 23 percent national sales tax on new goods and services for personal consumption could replace all federal taxes — income, estate, Social Security, Medicare and all the rest. It would remain revenue neutral, meaning the federal government would take in as much as it does now from all of those various taxes."

Economist Alvin Rabushka helped develop one of the first flat tax system proposals. This interview explores the reasoning behind his ideas as well as the challenges associated with implementing his plan.

"The claim that the rich do not pay their fair share, and pay less in taxes than those at lower income levels, is completely inaccurate. In politics, perception often counts more than reality. As the late Democratic Sen. Daniel Patrick Moynihan famously stated: 'Everyone is entitled to his own opinion, but not his own facts.'"

"Russia flattened its personal income tax (PIT) schedule as part of a comprehensive tax reform in 2001. Tax revenues and compliance surged in the years following the reform, leading many to declare the reform a success. Since then, 28 countries have adopted the flat tax schedule and other countries continue to discuss the prospects, including the United States. This issue of Insights recaps the evidence on the performance of Russia's flat tax and provides a brief discussion of the proposed optional flat taxes in the U.S."

This piece focuses on the fact that, despite some naive views, a value-added tax does not result in lowering other taxes in a nation. The top marginal tax rate in Europe is higher than it is in the United States. This is true despite America not having any national value-added tax. Additionally, even after a low value-added tax is instigated, the tax rate commonly...

"What has come to the fore, however, is a healthy competition between two credible, if not complementary, alternatives to America's current tax system. That is, should we move to a Fair Tax or a Flat Tax?"

Alvin Rabushka, one of the economists responsible for encouraging the idea of flat tax in the U.S., reviews the status of flat tax policies in countries around the world, as of 2010.

"East-central Europe has embraced low, flat-rate taxes with enthusiasm over the past decade. Proponents argue this has played a central role in the region's economic success, although the evidence to support this is thin. Recently, the cause of flat-rate taxation has suffered setbacks [in] Slovakia and Slovenia. As east-central Europe becomes richer, will it fall into line with western Europe's preference for more progressive tax systems?"

"A wave of flat-tax legislation swept across Central and Eastern Europe after the fall of communism, as more than a dozen countries across the region adopted single income-tax rates—to the delight of free marketers who have long championed flat taxes as an economic stimulant."

"When it comes to designing a simple tax system that does the least damage to the economy, it would be difficult to find a better role model than Hong Kong. As The Economist wrote a few years ago, 'The territory's tradition of simple and low taxes … is widely seen as a main reason for its stunning rise to prosperity.' Many advantages of the Hong Kong tax system have been widely emulated in Asia, yet remain poorly understood in this country...."

"According to the CCH Standard Federal Tax Reporter, as of 2013, it now takes 73,954 regular 8-1/2" x 11" sheets of paper to explain the complexity of the U.S. federal tax code!"

"Here is a link to entire 1040 return, complete with instructions, when the income tax was first made permanent in this country, back in 1913. Fairly simple, wouldn't you say? Income from all sources minus deductions, exemption ($3,000 single; $4,000 married couple) and any withholding payments already made. And then, if you netted between $20,000 and $50,000, a 1 percent rate; between $50,000 and $75,000, 2 percent; and so on, all the way up to a top rate of 6 percent on net income over $500,000."

"As talk of tax reform caught Washington's attention on Tuesday, the comment by Ms. Schaeffer illustrated the central challenge of those eager to overhaul the tax code: Even those who favor eliminating tax breaks want to hang on to the breaks that benefit them."

"By early 1943, Congress had raised income taxes radically to finance the war and also imposed income tax on millions of Americans who had not paid it before. But polls showed that few Americans now subject to the tax for the first time were saving to make their payment."

"The policy world is abuzz with talk about whether a value-added tax should be part of the solution to our long-term fiscal problems. Most recently, Paul A. Volcker, head of President Obama's economic advisory board, said a VAT was 'not as toxic an idea' as it used to...

"It seems to me that the most productive and immediate step we can take toward holding government accountable is to end the federal government's ability to withhold income taxes from our paychecks."

"A flat tax implemented in the last decade in most regional countries did not significantly improve economic growth, foreign direct investment (FDI), employment or tax revenues, and some experts argue the region is better off scrapping it."

"Sen. Richard Shelby (R-AL) today introduced a bill to replace the tax code with a 17% flat tax that would reduce tax returns to 'the size of a postcard.' Shelby's Simplified, Manageable And Responsible Tax (SMART) Act establishes a flat tax rate of 17 percent on all income (personal and business)."

"It's tax time again, leaving many Americans asking why the process has to be so hard and some calling tax laws unfair to the poor and middle class. Flat tax proponents say it is both easy and fair. Opponents label it 'class warfare.' Is it time to change the system?"

"Slovakia has maintained a flat tax rate for nearly nine years. Originally introduced with the aim of stimulating investment and to show the world it had moved on from its former communist economy, it has now been abolished by the country's newly re-elected government. Andreas Peichl analyses the effects of the flat tax since 2004, and what the results of the government's move to a more progressive tax system might be. He also concludes that, despite the lack of data on its effectiveness, the remaining countries in Europe that still use a flat tax are unlikely to abolish it."

"The new tax credits, which will eventually cost the government more than $50 billion a year, are part of a growing array of federal benefits offered through the tax code. Known as 'tax expenditures' in budget jargon, such tax breaks were worth more than $1 trillion to recipients last year."

"As Washington grapples with the budget, it might be worth asking a simple question: What would Ronald Reagan do? He was the last president to preside over a significant tax reform, one that did exactly what both candidates in this year's presidential election said they want to do: lower tax rates and close loopholes."

"Fairness is a poor metric to evaluate tax policy. It is more important to focus on how much tax high-earning families and businesses already pay and if forcing them to pay more would in fact be fair to those who would bear the steep burden of the tax hikes."

Alvin Rabushka, one of the original proponents of the flat tax system, summarizes the progress of the flat tax throughout the world over the past 25 years.

"But it is Ruml's role as New Deal spinmeister that keeps him in our thoughts today. He devised the legislation that gave us withholding as we know it. Today Americans give up more money in federal taxes than at any time except when the country was at war: 20.7 percent of the economy. Without withholding, it would be difficult to envision this scale of taxation persisting in a land born of a tax revolt. Indeed, without withholding the outsized government we have today would be hard to imagine."

Mitchell offers a critique of the International Monetary Fund's recent study that harshly criticized the flat tax regimes that have been established in Eastern Europe. He argues that the study doesn't adequately determine the link between different tax regimes and economic growth and claims that the "authors attempt to mislead readers."

"The New Flat Tax ... would replace today’s convoluted tax system with a simple, neutral, and transparent tax system that would allow America to achieve its full economic potential."

"The contrasting comments underscore philosophical differences over the roles of the individual and society. But the most tangible disagreement is on taxing the rich."

Folsom argues against a progressive income tax, citing Constitutional precedent and historical examples. He mentions the "equal protection" clause of the Fourteenth Amendment and then details how progressive taxation, by violating the spirit of uniform application of law, has led to governmental corruption and sown seeds of discontent and class warfare.

"Many people think that the rich are able to weasel their way out of taxes, but they actually pay an overwhelming majority of the taxes in the United States. What's more, their share of the tax burden is increasing."

"The VAT is essentially a national sales tax, levied in proportion to the goods and services produced and sold. But its delightful concealment comes from the fact that the VAT is levied at each step of the way in the production process: on farmer, manufacturer, jobber and wholesaler, and only slightly on the retailer.

The...

"The clock is ticking down on Capitol Hill as a congressional supercommittee has only until Thanksgiving to agree on a plan shrinking deficits by more than a trillion dollars. The entire Congress then has to pass it by Christmas Eve or face huge across-the-board spending cuts."

"According to a Washington Post report, the Obama administration and leaders on Capitol Hill are looking seriously at a value-added tax to pay for health care reform and reduce federal budget deficits. Predictably, Republicans reacted to the news with glee. They view the VAT as political poison that will destroy Obama and congressional Democrats if they...

"Question: What other taxes offer an opportunity to be progressive besides income and inheritance taxes? Paul Solman: Great question. I hope school is still in session. One alternative tax would be a progressive CONSUMPTION tax, as advocated by economist Robert Frank of Cornell, sometimes featured on this page."

"With America's Republican presidential candidates lining up to declare their fealty to a flat tax – a system of personal-income taxation that assesses a single rate for all – opponents have focused on why it is a bad idea to raise taxes on the poor in order to reduce them for the wealthy. But, if a flat tax is such a bad idea, why have so many countries embraced it? A careful study of these countries – mainly post-communist countries in Eastern Europe and a smattering of tiny micro-states worldwide – suggests that there are three main reasons. First, some countries are so relatively poor and lacking in domestic capital that they opt to drop rates in order to attract foreign investors. Other countries are so small and ineffective at collecting revenue that they cannot afford a progressive tax system. Finally, some countries are so corrupt that they have to offer the wealthy a huge rate cut to get them to pay any taxes at all."

"There are excellent reasons for wanting to place the tax on consumption rather than incomes or corporate profits. One of the largest being that all taxes have deadweight costs and consumption taxes have lower ones than income or corporate taxes. A deadweight cost being the amount of economic activity that doesn't happen because of the tax: lower deadweights mean we can have more economic growth for any level of taxation, or if you prefer, higher taxes for any level of economic growth."

Chart or Graph

"So Ruml devised a pay-as-you-go plan for taxpayers whereby employers would retain a percentage of taxes from every paycheck and forward it directly to Washington's war chest. Withholding, as we know it today, was born."

"Figure 1 shows the trend in average tax rates since 1960 for top- and middle-income earners."

"As shown in Table 1, we find that the FairTax saves $346.51 billion in administrative costs in 2005 when compared to the administrative costs of the taxes it replaces."

"According to the CCH Standard Federal Tax Reporter, as of 2013, it now takes 73,954 regular 8-1/2" x 11" sheets of paper to explain the complexity of the U.S. federal tax code!"

List of countries with flat tax.

The withholding tax was implemented in 1943 under the Current Tax Payment Act. This cartoon visualizes the easier process of collecting income tax through this "pay-as-you-go" plan rather than having citizens pay one lump sum.

"Compared to the current system, a flat tax is extremely simple. Households pay tax on their labor income using a 10-line individual postcard. (See Form 1 in Figure 1.) They do not need to worry about reporting dividends, interest, and other forms of business/capital income."

"As the Baby Boom generation prepares to retire, lawmakers should be aware of the distribution of taxes and government spending across age groups as well, especially when considering entitlement reform."

These charts show the tax rates per income level.

Figure 1 is a graphic illustration of the concept of the Laffer Curve--not the exact levels of taxation corresponding to specific levels of revenues.

"The New Flat Tax (NFT) replaces all income, payroll, and death taxes along with a slew of excises. It will improve economic growth and simplify the tax code. The NFT rate is comparable to or significantly below the typical rate facing an individual or family today."

Chart advocating simpler tax code reform.

"Yet the data show the highest-earning families and businesses already pay the lion's share of the federal income tax burden."

Chart shows past levels of VAT tax for various countries.

Graph depicts the Top U.S. Federal marginal income tax rate from 1913 to 2011.

"Chart 3 shows that VATs almost always have resulted in a larger aggregate tax burden."

In a 2005 survey of American attitudes on taxation, 77 percent of respondents said the federal tax system should be completely overhauled or needed major changes.

"If the tax complexity burden were reduced by 90 percent, the historical average annual growth rate of 3.2 percent would increase to between 4.02 percent and 4.13 percent. Over 10 years, the U.S. economy would become approximately $1.6 trillion to $1.8 trillion larger, see Figure 6...."

Analysis Report White Paper

There is widespread consensus that the current tax system is a complicated failure that hinders the nation's growth while allowing the politically well-connected to manipulate the system to get special breaks that are not available to average workers and businesses. This is stimulating a great deal of interest in shifting to a simple and fair flat tax.

"Like old age, tax complexity has been creeping up on us. We may not notice it one year at a time, but a review of past years' tax documents compared to today's forms and instructions reveals just how shockingly complicated taxes have become. And the situation may soon get even worse."

America is one of the few nations without a value-added tax (VAT), but there is growing pres­sure to impose the levy. In simple terms, a VAT is a type of national sales tax. However, instead of being collected at the cash register, it is imposed on the 'value added' at each stage of the production process.

"The current tax code of the United States is irreversibly broken and should be repealed. The tax laws undermine the country's prosperity by imposing needlessly harsh penalties on work, savings, and investment.

Under the FairTax, the federal government would raise almost all of its revenue by taxing consumer purchases at a 'tax-inclusive' rate of 23 percent.... The FairTax is progressive, as it provides for a rebate of taxes (called a 'prebate') to be paid to each household on its spending up to the poverty level."

"Survey respondents overwhelmingly report federal taxes are too high, too complex, and the value received from the federal government is poor. A majority favors tax reform and is willing to give up some deductions and exemptions if it leads to a simpler tax code."

"Tax reform is of congressional interest in the 111th Congress. This report examines three main categories of tax reform: fundamental tax reform, tax reform based on the elimination of the individual alternative minimum tax (AMT), and proposals for reforming the corporate income tax in the 111th Congress."

"This study creates a comprehensive estimate of the total administrative costs, time costs, and direct tax compliance costs created by the complex U.S. federal income tax code. This paper deals only with Segments B, C, D and E from Figure ES 1. One can only imagine what the full burden of government on the well-being of society might be.

"This paper will explore the creation and development of the flat tax idea both in the United States and abroad, and it will address the need for tax reform as a central issue in the current presidential campaign."

"Lawmakers have long used the tax code for purposes far beyond simply collecting revenue to fund the federal government. Through the insertion of specialized tax provisions, the tax code is used to achieve policy and political aims as well."

After recounting how the "Laffer Curve" allegedly came into being, Arthur Laffer explains his theory on how tax increases and tax reductions impact the economy. Laffer looks at three major tax cuts in American history (the Coolidge, Kennedy, and Reagan tax cuts) and effectively charts the causes and effects of these tax related decisions.

The current tax system discourages saving. It discourages investment. It discourages entrepreneurship. It causes decision makers to misallocate the nation's resources, limiting productivity gains, wage gains, and the nation's overall level of international competitiveness. And, it is far, far too complicated. The New Flat Tax is the remedy.

Buenker provides a detailed history of the circumstances that led to the passage of the federal income tax amendment. The economic dominance of the northeastern United States created an attitude of sectionalism and distrust in western and southern states, and in every state, wealth was concentrated in the hands of a few.

While one can debate the merits of a VAT in other countries, the tax is not a good fit for the United States. It taxes a base that has traditionally belonged to state governments, its introduction would bring with it intergenerational inequities, it has a cumbersome administrative structure that would impose large compliance and administrative costs, and it would slow economic growth.

Taxes have a tremendous influence on the American way of life. This booklet examines taxes from a variety of angles, often highlighting how dramatically different the state-local tax climate is around the country.

Video/Podcast/Media

"Since January 2004, Slovakia has had a flat tax on income, consumption, and corporate profits. Most other taxes and tax exemptions were eliminated. Other formerly, communist countries, including Estonia, Georgia, Latvia, Lithuania, Romania, Russia, Serbia, and Ukraine, have also adopted flat tax rates. Unfortunately, in the United States, where the idea of a flat...

"Alvin Rabushka of Stanford University's Hoover Institution lays out the case for the flat tax, a reform of the current system that would replace the 66,000 page U.S. tax code with a single rate and no deductions other than personal exemptions. An individual tax return would fit on a simple postcard. Rabushka discusses the economic changes that would come with...

"In 2008, Bulgaria joined the group of countries in Central and Eastern Europe that adopted a flat tax. This was the result of a campaign led by the Institute for Market Economics and several other economists begun in 2004. The outcome exceeded expectations and proved that fears of the government were not justified. Bulgaria's economy is growing. Opportunities...

In the brief interview by Guy Raz in a D.C. hardware store with Bob Carroll, a tax expert at the American University, the two discuss the possibility of a value-added tax in America. After the mechanics of a value-added tax are explained, Guy Raz explains that at least in many European countries, the final price of a good is always the price that is advertised. In...

"There has been much discussion among policymakers and the media about the possibility of a value added tax, or VAT, in the United States -- either to help reduce the growing federal budget deficit or to offset other tax cuts. This week's podcast guest is Randall Holcombe, Ph.D., who has authored 'The Value Added Tax: Too Costly for the United States,' for the...

"This Center for Freedom and Prosperity Foundation video explains why a value-added tax would be a dangerous money machine for big government. The evidence from Europe also shows that VATs actually lead to higher income taxes."

This clip from the Chris Matthews Show features a moment of debate on the merit of the progressive income tax.

"The erosion of private property rights, a prodigious federal debt, and a nearly incomprehensible tax code are all part of an overweening administrative state that today threatens the liberty of all Americans.

The Second Constitution Town Hall on April 16, 2011, addressed these issues and took questions from a live audience. Congressman Mike Pence and Hillsdale College faculty and...

"The erosion of private property rights, a prodigious federal debt, and a nearly incomprehensible tax code are all part of an overweening administrative state that today threatens the liberty of all Americans. The Second Constitution Town Hall on April 16, 2011, addressed these issues and took questions from a live audience. Congressman Mike Pence and Hillsdale College faculty and leading...

Part Two of Three tax reform sessions provided to the public by the Mercatus Center. "Taxation has always been a major part of American politics and continues to be the focus for debate and discussion, especially when reform is desired. To understand this complex issue the Mercatus Center at George Mason University is pleased to present a three-day course on current tax policy and past reform movements."

Senator Arlen Specter introduces a bill amendment recommending that the Senate consider tax simplification and a flat tax.

"The guests debated whether the current federal income tax should be abolished in favor of a National Sales Tax, also known as the Fair Tax. The issue has been discussed in recent presidential candidates' debates. Daniel Mitchell is in favor of this change in tax policy. Bruce Bartlett is opposed to it and recently wrote an op-ed in the Wall Street Journal on the issue. They responded to telephone calls and electronic mail."

"The U.S. tax code gets more complex every year. It violates civil liberties and, left unchanged, will leave the United States at a powerful competitive disadvantage in years to come. Chris Edwards, Director of Tax Policy Studies, Senior Fellow Daniel J. Mitchell and Director of Information Policy Studies Jim Harper dissect the troubling aspects...

"This Center for Freedom and Prosperity Foundation video shows how the flat tax would benefit families and businesses, and also explains how this simple and fair system would boost economic growth and eliminate the special-interest corruption of the internal revenue code."

Donald Duck learns the importance of the federal income tax in this World War Two short propaganda film sponsored by the US government.

"The American tax system is 'a huge convoluted mess,' says Chris Edwards, who studies tax policy at the Cato Institute, a Libertarian think tank in Washington."

"Isabel Sawhill and Curtis Dubay talked about the use of a Value Added Tax (VAT) as a means to curb U.S. debt, and they responded to telephone calls and electronic communications. In an interview with CNBC, President Obama when asked about the use of the tax said it would be 'novel' for the U.S to incorporate one."

Primary Document

As the title suggests, this selection from the Federalist Papers describes Alexander Hamilton's views on the intricacies of taxation. Hamilton continued his treatise on taxation in the following six Federalist Papers: No. 31, No. 32,...

In a letter to president Barack Obama, many members of Congress expressed their disapproval of a national value-added tax for America. This letter comes after one of the president's economic advisors, Paul Volcker, suggested a value-added tax to reduce America's budget deficit. The signers of the letter believe that increased taxes would be too harmful to Americans...

"We favor an income tax as part of our revenue system, and we urge the submission of a constitutional amendment specifically authorizing Congress to levy and collect a tax upon individual and corporate incomes, to the end that wealth may bear its proportionate share of the burdens of the Federal Government."

"We congratulate the country upon the triumph of... important reforms demanded in the last national platform, namely, the amendment of the Federal Constitution authorizing an income tax... and we call upon the people of all the States to rally to the support of the pending...

"To promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national sales tax to be administered primarily by the States." This is an example of a fair tax proposal, introduced to Congress in 2013.

"To amend the Internal Revenue Code of 1986 to provide taxpayers a flat tax alternative to the current income tax system."

In 1913, the United States ratified the 16th Amendment to the constitution. This amendment authorized Congress to place a direct federal income tax on individuals. The first Form 1040 came out the same year.

The IRS provides a timeline of the development of the IRS and tax code, starting with Lincoln's Civil War income tax of 1862 and going to the present.

"The federal, state, and local tax systems in the United States have been marked by significant changes over the years in response to changing circumstances and changes in the role of government. The types of taxes collected, their relative proportions, and the magnitudes of the revenues collected are all far different than they were 50 or 100 years ago. Some of these changes are traceable to specific historical events, such as a war or the passage of the 16th Amendment to the Constitution that granted the Congress the power to levy a tax on personal income. Other changes were more gradual, responding to changes in society, in our economy, and in the roles and responsibilities that government has taken unto itself."

"Clearly, the nation's increasingly dire economic and fiscal situation has increased the motivation—and the urgency—to reform the federal revenue system, along with the federal government's other unsustainable institutions and practices. But what would an 'ideal' tax code look like?"

"The most serious problem facing taxpayers – and the IRS – is the complexity of the Internal Revenue Code (the 'tax code')."

"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...

"The Constitution gave the states the power to impose direct taxation. The federal government could impose direct taxes as well, but only if those taxes were apportioned among the states in proportion to their representation in Congress. In this case the Court examined a national income tax passed by Congress in 1894. This case was decided together with Hyde v. Continental Trust Company of the...

"So firmly has the opinion that progressive taxation is both innocuous and desirable been established that even those who were alarmed by some of its visible effects seem to feel that any critical examination of the principle as such would be a futile waste of effort and that anyone who undertook it would thereby mark himself as an unpractical doctrinaire. Quite lately, however, a change in this attitude is noticeable. After a long period in which there was practically no questioning of the principle as such and the discussions on the whole merely repeated the old arguments, there is a new critical attitude noticeable in the occasional references to the problem; and there have already appeared some notable major contributions to the discussion."

"1942 - The Revenue Act of 1942, hailed by President Roosevelt as 'the greatest tax bill in American history,' passed Congress. It increased taxes and the number of Americans subject to the income tax. It also created deductions for medical and investment expenses." - IRS

"In 2005, Americans will pay about $2.1 trillion in combined federal taxes, including income, payroll, and excise taxes, or about 16.8 percent of Gross Domestic Product (GDP). However, the amount of taxes paid does not reflect the total cost to taxpayers of the federal tax system. In addition to taxes paid, taxpayers also bear compliance costs and efficiency costs. Understanding the magnitude of these additional costs is important because every dollar spent on compliance and lost due to inefficiency represents a dollar that society could have spent for other purposes."

"Most agree that the U.S. tax system is in need of substantial reforms. The 113th Congress continues to explore ways to make the U.S. tax system simpler, fairer, and more efficient. Identifying and enacting policies that will result in a simpler, fairer, and more efficient tax system remains a challenge."

"The Buffett Rule is the basic principle that no household making over $1 million annually should pay a smaller share of their income in taxes than middle-class families pay. Warren Buffett has famously stated that he pays a lower tax rate than his secretary, but as this report documents this situation is not uncommon. This situation is the result of decades of the tax system being tilted in favor of high-income households at the expense of the middle class. Not only is this unfair, it can also be economically inefficient by providing opportunities for tax planning and distorting decisions. The President has proposed the Buffett Rule as a basic rule of tax fairness that should be met in tax reform. To achieve this principle, the President has proposed that no millionaire pay less than 30 percent of their income in taxes."

"The present volume was begun seventeen years ago. At the time of the discussion of the income tax which culminated in the law of 1894, when practically nothing had been written on the subject in this country, I undertook to make researches into the history of taxation in the American colonies and states which might throw light on the question. The results of some of these studies were...

"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."

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