"The Income Tax has made more liars out of the American people than Golf has. Even when you make one out on the level, you don't know when it's through if you are a Crook or a Martyr."
Will Rogers

Suppose you've just been to your accountant and he says you owe eleven hundred bucks on your Income Taxes, nine hundred and a few bucks to the Feds and the rest to your state. Somehow or another, this year you had yourself all primed for a refund. Welcome to what's happened during eighty-five years of fiddling with the tax code.

Last year you itemized and your form ran to eleven pages and the accountant bought himself the latest software and has you on computer. So if he blew something last year, and chances are he did, you'll be living with it for who knows how long? That missed carry-forward from the money you loaned and lost to your brother-in-law is gone forever.

This country needs a four line Tax Form, a flat-tax and regardless of what we all think about Mr. Forbes, we need it quickly. One line for how much we made, another how much we owe, third how much we've already paid or had withheld and fourth, who owes who how much. Four lines, one page and the government mails you a check or you mail them one. Simplicity itself and everyone could figure it out.

A huge windfall for the wealthy? That's been the major complaint over the Forbes plan and there's considerable justification. A two tiered flat-tax would take care of most of the griping about unfairness, something that might kick in at an agreed-upon number, perhaps $500,000 per household. The flat- tax percentage would double on all income above that number. The wealthy would thereby pay a fairer share, but not be encumbered by the endless graduations and bracketing that make liars of us all.

At one point in my life when I was in the construction business, we used to get a set of specifications from the architect as a part of the bid documents. Specs are the how-to-do-it explanations that go along with a set of plans. They were always presented in a book form nearly four inches thick and hardly anyone ever read them, except for the section on payouts and that was only a page or two. It was a historical document, much as the tax code is a historical (some would say hysterical) document. Every time some contractor screwed up, the architects put another clause in the specs to keep it from happening again. Actually, not so much to keep it from happening, they knew good and well it would happen. The clauses were mainly to cover their butt. But the result was that the book got thicker and a clause somewhere in the front was bound to contradict another clause found somewhere in the back, so there was ample opportunity to get around any truly unreasonable requirement. Nobody ever really knew where they stood, not the designer and not the builder. Nothing that's been invented yet, beats a handshake. You do the job right and I'll pay you the money, that's all we really expect. Tax collection ought to be a handshake.

We've only had an Income Tax in this country since 1913 and now the Tax Code makes those architects and their specifications look like paupers. The IRS has found a way to create a tax "specification" so endlessly cross-referenced and complicated that even they can't figure it out anymore. If you ask three different agents for clarification, you will very likely get three different answers.

Suppose we really did have a four line Tax Form, or six lines if you feel the need. Instead of these damnable sliding brackets that make no one happy, with thousands of deductions and loopholes, just sixteen or eighteen percent across the board on personal income and no deductions. Ten or twelve percent across the board for corporations and mom and pop grocery stores alike, and no deductions. The actual percentages would need to be agreed upon after a look at the federal requirement for income and the gross personal and corporate income. Mr. Forbes is a fair-minded man and if he thinks seventeen percent will do it, I can live with that for purposes of argument.

If you earn fifty thousand, you kick eight thousand five hundred to the government and keep forty-one five. No deduction for interest on the mortgage and no write-off for an uninsured loss. If you want to buy a home, then buy one. If you choose not to insure something and it's stolen or lost, that's your choice. There is no justifiable reason for government to be in the middle of those decision-making processes. If you chose to rent, why should your taxes subsidize my purchase of a home? If your golf clubs are lost or stolen, why should I have to pay part of the bill for new ones?

There are those who claim the rich and super-rich would be victims, that they feed off those deductions and their whole lives are organized around the loopholes that they've fought for and won. But my instinct is that they hate them and big business hates them as well. The complicated decision-making and investing process would be much more simple and straightforward, if it weren't for the Tax Code as it now exists. The CEO of a corporation who wants to implement a particular strategy has to wait for months, while a hundred accountants and fifty tax lawyers fight back and forth over whether or not he can do it. Even then, they're not really sure, the IRS may make a retroactive ruling five years down the road. It puts the whole money-making process at a hell of a disadvantage and those disadvantages have a large impact on the average worker's job security. All too many downsizings and decisions to manufacture off-shore are as much founded in tax advantages as they are wage concessions.

Why should an equitable tax code allow a profitable business to buy an unprofitable one and charge it off against income? That forces you and me to get stuck with the bill, at your and my government's invitation. If one corporation wants to buy another, fine. But it should be a good business decision and not just a good tax decision.

And along with that, the three-martini lunch goes by the boards.
In my view, the three-martini lunch is a perfect example of inequity and paper-fumbling. No one likes all that bean-counting on every little expense. And the cost of the bookwork is a backbreaker. Business should be happy to take ten or twelve percent of gross income, with no deductions and hand it over to the government.

If the American wage-earner is allowed to keep eighty-five percent of what he makes and the businessman ninety percent, the economy of this country will take off like a car that's just been shoved out of the mud. Accountants and tax attorneys will squeal, but they'll find much else to do in an expanded economy.

There is a huge problem in allowing the first special-interest deduction. As soon as the door is opened to one, all the others are re-invited and we we will find ourselves right back where we are now, in chaos and inequity. With a two tiered no deduction flat-tax, the government will be able to send half it's IRS agents home and collect the money they're fairly and equitably entitled to, without making tax cheats of us all.

What about the poor? Is it fair and equitable to take sixteen percent of what they've got as well? I think so, even those on welfare. That's one of the big problems right now, facing welfare recipients. If they get off welfare and get a job, their actual take home pay decreases. That sad fact is one result of the graduated tax, it penalizes bootstrapping one's way out of poverty. With a two-tiered flat tax, when a welfare mother finds work that pays her more than her welfare check, she's on her way up instead of penalized. So far as those on welfare are concerned, welfare payments could be increased by sixteen percent to level the low end of the playing field and that money would come directly back in taxes. So the basic support net wouldn't change and the cost of the support net wouldn't change, just the incentives to work. Welfare recipients would at last be encouraged out of their dependence.

How would a flat-tax improve the business climate? At the present time, business is encouraged to run inefficiently by the complexity and the outright subsidy of the tax code. Corporations accumulate more paper shufflers than they efficiently need, because paper shufflers are deductible. But they add nothing to the value of product. Business is encouraged to keep expenses at the high end of the scale, because only net profit is taxed and thereby, government subsidizes business to run fat through the tax code.

Private citizens, you and I and the president of General Motors, pay for that subsidy through an outrageously complicated and inequitable personal income tax. If business paid a flat tax on gross income, they would become enormously more efficient and competitive. All cost savings would fall directly to the bottom line. That efficiency would bring down prices and increase markets, particularly foreign markets.

Cutting out the needless and unproductive overhead may sound like a loss of jobs, rather than job security.

In part and in the short term, that's correct. But the federal government, through manipulation of the tax code the tax code has no business being in the social engineering game. If markets increase, jobs increase and we can begin to wean ourselves away from the micro-management of the economy by Congress. Business is a tough game, more and more an international game and it can only be run successfully over the long-term by serving expanding markets. The Congress knows nothing about business, they've given ample evidence of that by the way they've run the largest business of them all, the federal government. Yet they have forced upon us a system of lobbyists, forced the business community to work for years at cross purposes, just to get what they need to compete. An unworkable and incomprehensible tax system makes no logical sense and as world markets become more interdependent, such government interference becomes dangerous to the health of our economy.

Corporate America should jump at the chance to untie their arm from behind their back. I expect that the result would be an economic surge that was solidly market based and would go a long way toward improving employment.

Taxpayers will no longer have reason to complain of paying up to thirty-seven percent in income taxes and finding out it's not enough. They will for the most part have an additional ten to twenty percent to do with as they wish, to save for retirement, invest in one way or another or feed back into the economy. They will no longer need to fear the next raise bumping them to a higher bracket or, in the case of a second wage-earner, whether the tax bite will erase most of the additional benefit to family security.

Let me return briefly to the matter of welfare recipients and the marginal wage-earner, because it's a matter of concern to anyone who hopes for the success of the disadvantaged.

As things stand now, I've mentioned that welfare would have to be increased by sixteen percent (or whatever percent is agreed as the flat-tax rate), to keep the ground level for those who need help. They've never paid taxes and have no history of contributing to their government. They would now begin to build a history of participation in the real economic world, at the same sixteen percent rate as all other citizens.

So is this merely giving dollars and then taking them away?

It goes well beyond that, it goes to inclusion, for those who have been consistently excluded. It goes to mindset and opportunity and the desire to get ahead. So far in the history of the welfare state, welfare was something the poor stayed on, because if they worked, taxes kicked them right back down below what was coming in without work. The two tiered flat-tax structure isn't a total answer to the complications of welfare, but it will at least begin the participation of the working poor, even if it's with given money.

The gap between earning and not earning virtually disappears and working one's way off welfare begins to look like a worthwhile and achievable goal. A good deal of what keeps the poor on their backs has been socially engineered by Washington in a well-intentioned but misguided system of income re-distribution. The working poor's chance to escape the slavery of welfare has been the victim, and that's unfair in the extreme for a country that claims equality of opportunity. The free-market and removal of the incentives to stay poor will help the low income wage-earner more than all our failed government programs, well intentioned or not. No one wants to be poor, no matter what the opinion in Washington, no matter the campaign rhetoric by conservatives.

What percentages are appropriate for personal and corporate income?
That depends upon how much money government legitimately needs and what the gross income resources are. It could be twelve and six or twenty-two and eleven, but whatever the final number, the challenge will be to prevent incursions into the tax code for one or another of the special-interests that have burdened us increasingly.

A tax code that can no longer define itself, a tax code that pays the cost of corporate loss with private income, a tax code that conspires to keep the poor from advancement, a tax code that encourages evasion of payment, is a tax code that is no longer supportable.

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