The Income Tax Mess

The following release was issued today by Ken Hoagland, National Communications Director of

To stimulate consumer spending this year America will essentially borrow money from China and other lender nations and provide rebate checks to our taxpayers. Astoundingly, however, just obeying our almost indecipherable 67,500 pages of tax regulations will cost about $100 billion more in tax preparation costs than the cost of the rebates. Why? The income tax system bedevils American taxpayers and damages the national economy but the tax code also serves the political, profit and power motives of a small group of politicians, academicians and lobbyists.

The income tax is big business in Washington. More than half of all Washington lobby expenditures in any given year are devoted to winning tax code breaks. While Republicans and Democrats disagree on almost everything else, rewarding favored constituents, punishing political opponents and affecting citizen behavior through the tax code is pursued with equal vigor on both sides of the aisle in Congress. The process has created a complex and destructive mess.

Warren Buffet and other American millionaires and billionaires will pay a lower tax rate again this year than their secretaries. If you are married, you will pay higher taxes than two people living together. If you continue working while collecting Social Security, your benefits will be taxed. If you are an American business, "embedded" income and payroll tax costs will account for as much as 20 percent of the price of your goods and services. These costs and the highest corporate tax rate in the world make American products far less competitive both here and abroad. Our income tax system has actually helped drive more than $12 trillion of American wealth offshore in recent years.

But if you happen to find a job on the House Ways and Means Committee, the Senate Finance Committee or the Joint Committee on Taxation as either a staffer or, better yet, an elected representative, you have a bright future with the tax code. Seven figure signing bonuses are not unheard of when "K St." tax lobby firms are looking for talent and connections. Is it any wonder that taxpayers hear frequent promises that "something must be done" but that the tax code only gets more complex, unfair and dysfunctional? There is, however, a better way to collect taxes that takes both politics and lobbyist profits out of the tax code.

The most viable alternative to the current system remains the FairTax, a progressive national consumption tax with 70 Congressional co-sponsors and a growing citizen base clamoring for change. Unlike the current system, it taxes the $1.5 trillion underground economy, transforms twelve million illegal immigrants into taxpayers as consumers, and ends the marriage penalty, the corporate tax, the capital gains tax, the inheritance tax and all income and payroll taxes. It eliminates all federal taxes on the poor, gives the middle class a healthy tax break and taxes billionaire's spending at an equal level. Every wage earner takes home their entire (federal withholding free) paycheck under the FairTax. It also provides a far broader base of revenues into the faltering Social Security and Medicare programs. Most experts concede that adoption of the FairTax would stimulate trillions of dollars of foreign investment into the US economy but despite its clear benefits to the nation and for predictably self-interested reasons, the tax lobby hates the FairTax. Without exemptions, it removes both lobbyists and Congressional mischief from the tax code.

Even without prominent FairTax advocate and Presidential candidate Mike Huckabee on the campaign trail and despite blatant distortions from Washington, the national FairTax campaign continues to grow at the grassroots level. It is building toward the day when enough taxpayers can finally overcome Congress' self-interest in their favorite plaything -- the cause of our annual tax torture and a millstone around the neck of our economy.

Ken Hoagland is the National Communications Director of, a nonpartisan national grassroots campaign to replace the income tax system with a progressive, transparent and simple national retail sales tax.


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