Simplifying our tax system by eliminating write-offs and reducing the complexity of filing can offer numerous benefits, both for individuals and for the government. Here’s why this approach makes sense:
1. Increased Efficiency: A simplified tax code that eliminates deductions and credits would reduce the administrative burden on both taxpayers and the IRS. With fewer forms to fill out and less documentation to keep track of, individuals would be able to file taxes on a simple postcard, reducing time spent on tax preparation. This would also significantly reduce the need for the massive IRS infrastructure that is currently required to process and audit countless forms, saving taxpayers money on the cost of government administration. In fact, studies have shown that over $10 billion per year is spent just by individuals and businesses on tax compliance costs alone .
2. Reducing the Risk of Errors and Fraud: The current system is prone to mistakes, as taxpayers often struggle to understand complex deductions, credits, and rules. Simplifying the system by basing taxes solely on taxable income would reduce the risk of inadvertent errors and the need for expensive audits. Additionally, this could reduce the opportunities for fraud, as individuals would no longer need to “game the system” to receive deductions they do not deserve.
3. Fairness and Transparency: A flat tax system, where individuals pay a set percentage of their income without the complications of deductions, can be seen as more equitable. Everyone would be taxed based on their income, without loopholes that favor certain groups, leading to greater public confidence in the tax system. Moreover, it would make the tax process more transparent, as individuals would know exactly what they owe without needing to rely on complex instructions or accounting services.
4. Promoting Economic Growth: By simplifying the tax code, individuals and businesses could spend less time navigating the complexities of the tax system and more time focusing on productive activities. Economists argue that simplifying taxes can also encourage entrepreneurship by lowering the cost of compliance and giving businesses more certainty about their tax obligations .
In summary, simplifying the tax system by eliminating write-offs and reducing the IRS’s role could lead to greater efficiency, fairness, and economic growth, while reducing the overall burden on taxpayers. This would create a streamlined process that would save both time and money, making the system more accessible and transparent for all.