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Tuesday, February 17, 2009

A tax code even a congressman can understand

Andrew Moylan editorializes that simplifying the federal tax code would provide an economic "stimulus."

Individual taxpayers spend more than 3.5 billion hours complying with the code. That  time is worth an estimated $92.6 billion. They also spend an additional $27.7 billion on preparation services, software, and other out-of-pocket costs.

For their part, corporations spend about $170.4 billion on tax compliance, or the equivalent of more than 40 percent of all corporate tax collections from 2007. In total, more than $290 billion is flushed down the drain of tax compliance every year at the federal level.

Scrapping our 67,000 page monstrosity of a tax code and replacing it with a simple, easy to understand national sales tax or a flat income tax would be a short-term stimulus without the long-term harm of the massive borrowing that Congress and President Obama favor.
Such a simplification would also benefit potential Obama cabinet nominees and members of Congress who can't figure out the tax code themselves.

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