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Just for thought: suppose the tax system became so simplified that only goods X, Y,and Z were taxed at rates a,b,c. You pay aX+bY+cZ in taxes per year. It would

Just for thought: suppose the tax system became so simplified that only goods X, Y,and Z were taxed at rates a,b,c. You pay aX+bY+cZ in taxes per year. It would be easy for voters to campaign their politicians to lower tax rates and easily verify. Obviously in the real world there aren't 3 levers to adjust: there are probably thousands or tens of thousands. Apart from the lobbying, politicians may themselves desire this, because it would allow them to lower those 3 very-public levers to claim they lowered taxes, while at the end of the day maintaining the same level of spending because they just offset those losses over thousands of other levers. After all, things have to get paid for. Then at least they can tell the public: "Hey, I lowered tax rates." And when the public's wallet doesn't feel the savings, the politician still wins votes because as far as the public can see, they lowered those tax rate levers. Compare that to a politician under the 3-lever system. Either they lowered taxes or they didn't. What I'm suggesting is that a complex tax system allows politicians to take the heat off themselves when the public demands lowered taxes, while still maintaining the amount of money the government takes in to cover the budget.

betenoire 10y ago
You desire a system that encourages and facilitates blatant deceit?
- nameone888 10y ago
  Our system now is full of deceit and every system prior has been full of deceit. It rather comes with the territory of humans. Why not then be honest about how we're "cheating things" from a human perspective, so long as the outcomes are agreeable.
- bunderbunder 10y ago
  Seems more like the parent is pointing out that a simple, manageable tax system isn't politically tenable in a representative democracy. Certainly not one as madcap as the USA's.
rayiner 10y ago
That's exactly why we have a proliferation of taxes and tax breaks instead of a simple tax system. Perform a thought experiment. Say we just have a straight 35% income tax. Now, say you need to raise additional revenues. Do you (1) raise the single tax; or (2) impose a new tax on some specific part of the economy? Option (1) gets everybody mad at you. Option (2) gets only a tiny number of people mad at you. Same thing for tax breaks. Say you want to cut taxes. Do you cut the marginal rate, which helps everyone (even non-voters), or do you target cuts in a way that helps people who are likely to vote (homeowners, people with employer-paid health insurance, old people, etc.)? Same thing with business tax breaks. Do you cut rates for all businesses, or do you target them for businesses that are big employers in your state/district?
- Qantourisc 10y ago
  I get mad at option 2 each time they do this, we got more crap to deal with, more rules, more bureaucracy, more paperwork. If you want to raise taxes, fine, but stop trying to hide it and extract in every corner. I do however agree you need some control about where you ask taxes on, but keep it simple. And reuse those tax-levers whenever possible.
- kenning 10y ago
  Yeah but a flat tax would be extremely regressive. If you had a simple equation like tax% = x/4 + 10, where x is your tax percentile, politicians could loudly say that they wish to increase or decrease the slope of the line and people would know that increasing slope would mean a more progressive tax.
  - jrs95 10y ago
    If it had a standard deduction and all investment income was counted the same as wages, it might actually be more progressive than the current system, depending on the exact numbers. Payroll taxes are mainly what affects people at the lowest income levels.
    - laughfactory 10y ago
double0jimb0 10y ago
A complex tax system allows competition within the tax advising service provider market. You get what you pay for... the original American Way (tm).
cmurf 10y ago
We basically have that, except it's goods X, Y, Z are untaxed at rates a, b, c. That is, those goods are tax exempt, a.k.a. they're deductible expenses. Some of those goods get you a tax credit. Multiply this by tens of thousands. And you get them in various ways, a handful are on form 1040, a bunch more are on form 1040A but those are just categories the actual deductions are found in a booklet that lists the specific goods and what their category is for 1040a, and there's literally asstonnes that have their own private worksheets to compute the deduction or credit, some of which must be filed, most of which don't even get filed but you have to do them to correctly compute the deduction or credit. It's this complicated because a tiny lobby with a lot of influence manages to go their own private "line" item deduction, and almost no one knows about this. It's accountants and tax preparation software.
moomin 10y ago
I'm going to argue something a bit different: the overall tax revenue is roughly equal to government spending. The complexity of the tax code is to some extent a distraction. It's complex, and has winners and losers, but ultimately you'd need to raise the same amount whatever you did. If you really want lower taxes, you need to be honest: you'll be taking that money from someone else. Even then, it's amazing how many politicians trailblaze cuts in spending that don't really make a difference. Want to make a huge difference to the US tax base? Take a look at defence spending. And don't pretend it won't cost some people dearly if you cut it.
- thomastjeffery 10y ago
  > If you really want lower taxes, you need to be honest: you'll be taking that money from someone else. s/lower/raise Taxation is theft. > Take a look at defense spending. And don't pretend it won't cost some people dearly if you cut it. I grew up on a US Army base. I can honestly tell you from firsthand experience that an absurd amount of that money goes to waste. 550 billion dollars is an insane amount of money.
- djrogers 10y ago
  > the overall tax revenue is roughly equal to government spending. Not even close - spending FAR outpaces tax revenues. That's what the federal deficit comes from. Last year we got about $1.20 in spending for every $1 in taxes collected.
legulere 10y ago
A counterpoint: not all countries are so obsessed with lowering taxes. It's hardly a topic in Germany for instance. At the same time the tax system is also pretty complex
SilasX 10y ago
The other problem with "only tax three things" is that the government wants to raise a lot of money and so [the combination of] those rates end up being really high, and enormous resources are invested in finding ways to make X-instances not technically count as an X for purposes of tax law, and the tax code must balloon to fend off these increasing "attacks".

betenoire 10y ago

You desire a system that encourages and facilitates blatant deceit?

nameone888 10y ago
Our system now is full of deceit and every system prior has been full of deceit. It rather comes with the territory of humans. Why not then be honest about how we're "cheating things" from a human perspective, so long as the outcomes are agreeable.
bunderbunder 10y ago
Seems more like the parent is pointing out that a simple, manageable tax system isn't politically tenable in a representative democracy. Certainly not one as madcap as the USA's.

rayiner 10y ago

That's exactly why we have a proliferation of taxes and tax breaks instead of a simple tax system. Perform a thought experiment. Say we just have a straight 35% income tax. Now, say you need to raise additional revenues. Do you (1) raise the single tax; or (2) impose a new tax on some specific part of the economy? Option (1) gets everybody mad at you. Option (2) gets only a tiny number of people mad at you. Same thing for tax breaks. Say you want to cut taxes. Do you cut the marginal rate, which helps everyone (even non-voters), or do you target cuts in a way that helps people who are likely to vote (homeowners, people with employer-paid health insurance, old people, etc.)? Same thing with business tax breaks. Do you cut rates for all businesses, or do you target them for businesses that are big employers in your state/district?

Qantourisc 10y ago
I get mad at option 2 each time they do this, we got more crap to deal with, more rules, more bureaucracy, more paperwork. If you want to raise taxes, fine, but stop trying to hide it and extract in every corner. I do however agree you need some control about where you ask taxes on, but keep it simple. And reuse those tax-levers whenever possible.
kenning 10y ago
Yeah but a flat tax would be extremely regressive. If you had a simple equation like tax% = x/4 + 10, where x is your tax percentile, politicians could loudly say that they wish to increase or decrease the slope of the line and people would know that increasing slope would mean a more progressive tax.
- jrs95 10y ago
  If it had a standard deduction and all investment income was counted the same as wages, it might actually be more progressive than the current system, depending on the exact numbers. Payroll taxes are mainly what affects people at the lowest income levels.
  - laughfactory 10y ago

double0jimb0 10y ago

A complex tax system allows competition within the tax advising service provider market. You get what you pay for... the original American Way (tm).

cmurf 10y ago

We basically have that, except it's goods X, Y, Z are untaxed at rates a, b, c. That is, those goods are tax exempt, a.k.a. they're deductible expenses. Some of those goods get you a tax credit. Multiply this by tens of thousands. And you get them in various ways, a handful are on form 1040, a bunch more are on form 1040A but those are just categories the actual deductions are found in a booklet that lists the specific goods and what their category is for 1040a, and there's literally asstonnes that have their own private worksheets to compute the deduction or credit, some of which must be filed, most of which don't even get filed but you have to do them to correctly compute the deduction or credit. It's this complicated because a tiny lobby with a lot of influence manages to go their own private "line" item deduction, and almost no one knows about this. It's accountants and tax preparation software.

moomin 10y ago

I'm going to argue something a bit different: the overall tax revenue is roughly equal to government spending. The complexity of the tax code is to some extent a distraction. It's complex, and has winners and losers, but ultimately you'd need to raise the same amount whatever you did. If you really want lower taxes, you need to be honest: you'll be taking that money from someone else. Even then, it's amazing how many politicians trailblaze cuts in spending that don't really make a difference. Want to make a huge difference to the US tax base? Take a look at defence spending. And don't pretend it won't cost some people dearly if you cut it.

thomastjeffery 10y ago
> If you really want lower taxes, you need to be honest: you'll be taking that money from someone else. s/lower/raise Taxation is theft. > Take a look at defense spending. And don't pretend it won't cost some people dearly if you cut it. I grew up on a US Army base. I can honestly tell you from firsthand experience that an absurd amount of that money goes to waste. 550 billion dollars is an insane amount of money.
djrogers 10y ago
> the overall tax revenue is roughly equal to government spending. Not even close - spending FAR outpaces tax revenues. That's what the federal deficit comes from. Last year we got about $1.20 in spending for every $1 in taxes collected.

legulere 10y ago

A counterpoint: not all countries are so obsessed with lowering taxes. It's hardly a topic in Germany for instance. At the same time the tax system is also pretty complex

SilasX 10y ago

The other problem with "only tax three things" is that the government wants to raise a lot of money and so [the combination of] those rates end up being really high, and enormous resources are invested in finding ways to make X-instances not technically count as an X for purposes of tax law, and the tax code must balloon to fend off these increasing "attacks".