In every election cycle, tax reform is front and center, highlighting every candidate’s platform. Tax fairness, tax simplicity, tax reduction. It’s a passionate populist appeal designed to win votes and lock down key electoral votes.
After every election all those grandiose, progressive reform ideas simply drift away into oblivion, and we are left with the same 17,000-page tax code, containing 5.5 million words which craft loopholes, exemptions, and deductions only a veteran tax lawyer could possibly decipher.
This cycle, conservative Republican Ted Cruz proposes a flat tax of 10% that would collapse today’s seven personal income tax rates into one and simplify the preparation of tax returns for millions of Americans. His plan has been attacked as hollow sloganeering that would have a negative impact on the poor and on the federal budget.
All tax reform is supposed to make the system fairer and simpler. I’m not convinced. Fairness is a totally subjective concept — it depends on whose deduction is being gored. For me, I’ll believe in fairness reform when I see it — right there in the “Refund” line on my reformed tax return.
As the late Steve Jobs famously declared, it’s time for us to “Think Different”… this time on tax reform. So, as we count down the days to the April 18 IRS filing date, here are some non-controversial tax reform proposals that might not make it to the president’s desk:
A FEDERAL INCOME TAX LOTTERY
Everyone should have a chance at lower taxes without having to hire a tax lawyer whose middle name is “loophole.” A national tax lottery would give everyone that chance.
Taxpayers would enter the lottery by checking a box marked “LOTTO — yes or no” on the Form 1040 and paying an additional 1% of their total annual income tax. Winners of the lottery would receive various forms of tax relief. Each grand prize winner would receive a lifetime exemption from all federal income, capital gains and estate taxes, plus an immediate refund of all such taxes paid during his lifetime. First prize winners would be awarded the lifetime exemption from taxes only; second prize, a 10-year exemption; and so on.
Surely, taxpayers will gladly kick in a few extra dollars to Uncle Sam for an outside chance at a lifetime exemption from federal taxes. The smashing success of state lotteries throughout the country shows that Americans simply love to gamble, no matter how long the odds. And, for those class warfare zealots, under the plan millionaires and billionaires would pay more to play.
April 15 could mark the start of “lotto fever” each year. And, that dreaded letter from the IRS might even bring some good news to a lucky taxpayer for a change.
A TAX ALLOCATION PROGRAM
Most taxpayers understandably think that some of their tax dollars are wasted on programs they don’t like. Doves hate to see their tax dollars spent on ICBM’s, Trident submarines, and nuclear aircraft carriers and submarines. Hawks are happy to pay for national defense, but are angered that their taxes pay for food stamps and other social welfare programs.
Maybe the federal government should take a few tips from successful college fund-raising campaigns. Most colleges allow alumni to designate how they want their contributions spent. The same concept might work for federal taxation. On his Form 1040, Rocky Taxpayer, a former Marine Corps officer and notorious hawk, would allocate 80% of his total tax to Seal Team Six of the Special Forces, 10% for the F-22 Raptor, and 10% for the next nuclear aircraft carrier.
His neighbor, Tammy Taxpayer, who served in the Peace Corps, might earmark 75 % of her taxes for public aid and unemployment benefits, 15% for endowment of the arts, and 10% for support of the United Nations.
Some folks won’t like this idea. They’ll argue that important programs may be jeopardized for lack of taxpayer support. They may be right. But, if taxpayers don’t support a program, it probably should be scuttled or cut down to size. After all, that’s what a democracy is all about.
THE TAXPAYER RECOGNITION PROGRAM
To most taxpayers, April 15 is a painful annual ritual in which honest citizens throw their hard-earned dollars down the seemingly bottomless spending drain in Washington. It is a totally impersonal process.
Colleges and charitable organizations raise funds with more sensitivity and warmth. Donors are recognized members of the prestigious “Inner Circle” or the vaunted “100 Club.” Major contributors may have a dormitory or the new wing of a museum named for a family member. It’s all part of the sensible strategy of making contributors feel good about giving.
We taxpayers could use some simple recognition for our enormous sacrifice. For example, taxpayers could be randomly selected by the IRS and honored as “Mr. and Mrs. 1040s” of the year. Each honoree would receive special recognition by having a federal building, Navy ship, or federal wilderness area or national park named after him of her. Just think of the patriotic pride that would swell in the breast of the taxpayer so honored.
More imaginative recognition programs would feature the likeness of taxpayers on postage stamps, or to replace the never-popular Susan B. Anthony on the not-so-silver dollar.
These ideas offer something that is completely missing from current tax reform proposals — that is, the remote possibility that, instead of grinding his teeth in frustration on April 15, a taxpayer will smile to himself in quiet anticipation as he writes his oversize check to the Infernal Revenue Service. He just might be the lucky winner of something other than an IRS audit!