We don’t support the “Fair Tax” (which would basically swap the national income tax for a national sales tax) Or the “Flat Tax” (which would streamline America’s existing tax code). Both plans would be vast improvements over America’s current system, to be sure, but we don’t believe the revenue “lost” by eliminating the individual income tax needs to be replaced.
Can’t government just stop doing all the stuff it shouldn’t be doing instead?
Also, our guess is letting workers keep the $1.3 trillion in income tax collected during the most recent fiscal year would have provided a helluva lot more “stimulation” than perpetuating a bunch of failed welfare statism/ crony capitalism.
In making the argument against the Internal Revenue Service, lots of Fair Taxers (and Flat Taxers) like to refer to the agency’s annual budget of roughly $13 billion as evidence of money that could be saved by scrapping the current tax code.
They’re right … but only partly.
According to a 2011 study led by Arthur Laffer the true cost of compliance with America’s labyrinthine tax code is a whopping $431.1 billion … annually. That’s nearly a third of the revenue collected by the tax itself.
In addition to the direct taxpayer costs associated with running the IRS, Laffer also calculated $31.5 billion in direct filing-related outlays and $10 billion in audit-related costs.
The biggest expense by far, though? The time lost by individuals and businesses forced to navigate the labyrinth – which Laffer’s team estimated at $378 billion each year.
Talk about another powerful incentive to get rid of the levy that’s most directly linked to jobs, capital investment and income levels.