This research paper argues in favor of the adoption of a flat tax as a substitute for the current income tax system in the United States. A flat tax, rigorously applied, would be far superior to the current system because it would be simpler, fairer, a more efficient way of collecting public revenues and it would be consistent with optimizing economic growth. Strong arguments can be made for diluting the flat tax through the adoption of various exceptions to it, but such an effort, if successful, would reduce or eliminate some of its positive effects. The adoption of a flat tax should be accompanied by supermajority requirements to make it more difficult for future politicians to undermine its positive features.
Deficiencies of the Current Tax System
During the last several years, it has become increasingly evident that a great many Americans are disillusioned with the current income tax system. A March, 1995 Yankelovich poll for Time/CNN showed that of those surveyed, 80 percent said they believed that the current system of exemptions and deductions favored the rich, 34 percent favored making major changes to the tax code and another 22 percent wanted to replace it entirely (McNamee, 1994, p. 85). The current system was summarized by the Economist as follows: "It is riddled with exemptions for everything under the sun; it stifles investment and entrepreneurship; and it is beastly to comply with" (A better way to pay, 1996, p. 32). Estimates of the annual costs of compliance range between $100 and 200 billion (A better way to pay, 1996, p. 32; and Armey, 1995, p. 22). Compliance takes up an estimated 5.2 billion hours in taxpayer time each year (Donlan, 1994, p. 50). The current Internal Revenue Code, the related regulations and revenue rulings fill about 40,000 pages (Goodgare, 1995, p. 27). The Internal Revenue Service (IRS) costs $7.6 billion annually. It has become a notoriously inefficient federal agency seemingly unable ...