I think that this is an idea that could eventually gain bipartisan support.
The idea has been tossed around quite a bit in this GOP primary season, but I think that it is something that deserves some consideration.
One of the major arguments against the current tax code is that there are too many loopholes and deductions that can be utilized to owe next to nothing in taxes. Simplicity is key here. If you have deductions that one can qualify for, make them cut-and-dry.
Some have suggested eliminating the IRS all together, which could be feasible if the tax code were streamlined. Politicians on both sides of the aisle could benefit from such a change. The Republicans, who don't typically like to raise taxes, would be happy with a tax percentage on income that was consistent and did not have a bunch of exceptions to every rule. Once again, simplicity. Democrats, on the other hand, would be pleased with the elimination of loopholes that enable those high-income earners to, in some cases, pay less in taxes than someone that works 9-5, 40-plus hours a week.
The U.S. corporate tax is disaster, and is set to become the highest corporate tax rate in the world starting in April 2012. A corporate tax is taxing the corporation twice because it is a tax on corporate profits before it pays dividends to its shareholders. These dividends that are paid out are also taxed by Uncle Sam.
Small businesses, large corporations, or any other entity that provides goods and/or services, are not the only ones that are hurt by excessive taxation. An increase in taxes for a company that provides a product causes the price of that product to go up. In other words, the tax increase is deferred to the consumer.
We need a tax code that is easy to understand, and just easy to implement. While all of this makes sense, no change will happen any time soon because the politicians seem to create excessive tax deductions for those that help them carry out their agenda.
The tax code needs to go, eventually. Unfortunately, politicians do not see things crystal clear, like those of us that are living this recession every day of our lives.