Tax Day Pipe Dreams

What if we let economists and journalists write the tax code?

(Page 2 of 2)

End withholding pleads freelancer Laura Vanderkam In USA Today. After all, misery loves company:

One way to slow out-of-control spending in Washington is to make everyone feel the same pain that quarterly payers experience. Ending withholding would do that - and it's not as crazy as it sounds.

Most Americans have paid taxes through withholding for so long, we think it's as inevitable as taxes themselves. But the income tax wasn't even constitutional until 1913. For its first three decades, citizens usually paid in lump sums. They grumbled, which kept rates low and made new programs hard to justify. For both those reasons, Congress insisted that Social Security taxes be withheld from paychecks when that program began in 1935.

Officials suspected that withholding "makes it harder for people to see the amount of money that's actually been taken from them," notes Charlotte Twight, Boise State University economist and author of Dependent on DC. Citizens would not see a connection between their payments and the things governments chose to finance.... "Even if people didn't demand lower tax rates, they'd be more willing to demand an accounting, an explanation, a correction of all the pork barrel projects," says Twight.

Tax the middle-aged says Slate's Tim Hartford, with a wink:

If Congress cut taxes on the $40,000 to $60,000 income bracket, it would encourage work from everyone in that bracket but lose tax revenue from everyone above that bracket. Ideally, it would offer the tax cut only to low earners. One way to do that is to offer the tax cut only to the young: Not many 25-year-olds make more than $60,000 anyway, but plenty of 45-year-olds do. Offering the tax cut to the 25-year-olds, the government motivates them to work harder; excluding the 45-year-olds, the IRS keeps their cash. And it's not unfair, since most of us will pay the age tax in the end.

And then there's everyone's favorite, the most impossible of all impossible dreams: The flat tax. The aptly-named David Lazarus resurrects Steve Forbes' good old flat tax proposal this year in the San Francisco Chronicle:

The Internal Revenue Service estimates that 60 percent of filers -- including IRS Commissioner Mark Everson -- turn to professionals to help get their returns in order.

This represents about $300 billion in additional costs each year for individuals and businesses, according to the nonpartisan Tax Foundation.

In that sense, the attraction of the flat tax is obvious: It's simple. You make this much, you pay that much. Your tax return is filed on a postcard.

Katherine Mangu-Ward is an associate editor of reason.

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