It's time to remove all tax deductions, credits, loopholes, and writeoffs from both the personal and corporate income tax codes. (With some rare exceptions.)
The KISS Plan for tax reform
The KISS Plan is not about tax rates. It is non-ideological first step toward a simpler tax system. The KISS Plan treats all individuals and businesses equally and removes the power of politicians to use the tax code to reward contributors. Note bene: This idea is NOT about HOW MUCH we tax individuals and corporations; it is about HOW we tax them. For thousands of ye
ars, governments have taxed to raise income. For all but the last eighty years or so, governments taxed you on the head count of your family, what you owned (how much land, how many any cows, whatever) or a percentage of your personal or business income. There were no deductions or exemptions. When a government creates or allows a deduction, it is encouraging an individual or business to spend money in one way rather than another. Tax deductions are indirect government subsidies to particular industries that have used political contributions to gain them. Deductions distort what should be a level and logical economic playing field. This is not fair to other industries, unnecessarily complicates the tax code, and encourages individuals and businesses to take economic or other actions based on something other than wise and logical self-interest. It’s time to get rid of all deductions in both the individual and corporate tax codes. This would reduce the power of the political class and insure that no individual or business takes any economic action due to tax implications, which economists of all stripes agree is a good thing. Three points:
1) The KISS Plan would gradually remove all the exceptions in the tax code.
2) For both individuals and businesses, the top five most used deductions would be gradually phased out over a period of years. This would hopefully reduce the amount of economic disruption caused by changing the rules midstream. All other deductions end immediately, or after the first year.
3) Everyone would pay some tax. If the principle is that all citizens should be treated equally, there should be no exceptions. Principles don’t have exceptions. Kill the deductions first. We can argue over progressive versus flat rate plans later. The KISS Plan is a first step toward reducing the power of the political class. Politicians have three tools to get contributions....monkey with the tax code, monkey with spending, or monkey with regulations. Let's take one of the tools away from the tools.
