One day of talking about taxes just isn't enough. Yesterday, Rand Paul said he wants to get the IRS out of your life. Who could oppose that?
As it turns out, almost everyone.
There is no inherent reason a tax code has to be complex. I can write a fully functional tax code in one sentence:
All sales of goods or services within the United States are subject to an 18% tax.
Lots of people would like to make some modifications, clarifications, exceptions and other tweaks to that code, and if experience is any guide, they would succeed. At last count, our federal income tax law, including the statute itself plus the regulations created by the IRS to implement the code was somewhere between 12,000 and 13,000 pages. We've been succeeding like crazy.
Why are we so good at making what could be simple so complex that literally no single person can understand all of it? Because it's so very tempting to use taxes to punish people for doing things we don't like (such as smoking, not having health insurance, or having a corporate headquarters in the US) and it's just as tempting to use taxes to benefit people for doing things we do like (such as borrowing money to buy a home, generating green energy or buying a Hummer and then destroying it).
Not everyone likes every exception that's written into the tax code. Those who don't like a particular exception call it a loophole. Those who do like a particular exception call it a targeted tax break. There's no reason anyone to be consistent about it--you just have to switch from talking about loopholes to talking about targets depending on how you feel about the exception. President Obama, for example, thinks that one particular rule that allows parents to leave money to their children without taxation is a "loophole". But he's in favor of another particular rule that allows parents a "targeted tax break" if they happen to have children in college. There's no logical reason for him to avoid saying that he'd like to create a loophole for parents with kids in college, or he's against the targeted tax break for inheritance. But we somehow think of loopholes as an oversight or mistake, and a targeted tax cut as a wise and efficient use of our tax code. Neither is true--no matter what we call them, exceptions are unwise, inefficient, and on purpose.
Rand Paul's flat tax is simpler, certainly, than the current system. But he still leaves in very popular exceptions, like the mortgage interest deduction. And if you can make one exception, why not another, and another . . .
Not everyone likes every exception that's written into the tax code. Those who don't like a particular exception call it a loophole. Those who do like a particular exception call it a targeted tax break. There's no reason anyone to be consistent about it--you just have to switch from talking about loopholes to talking about targets depending on how you feel about the exception. President Obama, for example, thinks that one particular rule that allows parents to leave money to their children without taxation is a "loophole". But he's in favor of another particular rule that allows parents a "targeted tax break" if they happen to have children in college. There's no logical reason for him to avoid saying that he'd like to create a loophole for parents with kids in college, or he's against the targeted tax break for inheritance. But we somehow think of loopholes as an oversight or mistake, and a targeted tax cut as a wise and efficient use of our tax code. Neither is true--no matter what we call them, exceptions are unwise, inefficient, and on purpose.
Rand Paul's flat tax is simpler, certainly, than the current system. But he still leaves in very popular exceptions, like the mortgage interest deduction. And if you can make one exception, why not another, and another . . .
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