It is time for the FairTax and Flat Tax supporters to unite behind a plan to eliminate the IRS, repeal the 16th Amendment, and start over. My resolution, House Joint Resolution 104 “Repeal 16”, would do just that.
Chairman Dave Camp of the House Ways and Means Committee has great intentions of presenting a simpler, fairer, flatter tax code. This is a noble objective, but the plan released Wednesday inappropriately preserves both the IRS and all the nefarious opportunities for politicians to again use the tax code to hand out cash, control markets, and manipulate human behavior.
My proposal is for a constitutional amendment to repeal the 16th Amendment, which established the current U.S. tax system. HJ Res 104 gives Members of Congress two years after ratification to pass a viable alternative for raising revenue fairly before our current tax regime is abolished. With this effort, Flat Tax supporters and FairTax supporters can unite in common purpose to eliminate the IRS.
According to the Mercatus Center at George Mason University, 4,428 changes were made to the tax code from 2001-2010. That’s more than one change per day. The same study shows that from 2002-2011, lobbyists spent over $27 billion petitioning federal, state and local governments. There was a strong correlation between lobbying expenditures and tax code changes. To be clear, tax code manipulations are the equivalent of earmarks.
Tax code manipulation is not new. In 1986, the U.S. tax code was significantly reformed by lowering the rates and broadening the base. Politicians and special interests then spent the next 28 years manipulating the code to bring it to where we are today. Even if the House tax reform proposal passes, Washington, D.C. will continue to be dominated by politicians who want to get re-elected and lobbyists who want to help fund political campaigns. They will hand out tax code loopholes the way politicians used to hand out earmarks. The status quo will remain, and the IRS will remain.
According to the Mercatus Center, Americans spend up to $378 billion in accounting costs and 6 billion hours to comply with the tax code. The time requirements are comparable to a city of 3.4 million people working full time to comply with the tax code. This would be a city larger than Chicago or exceeding the population of 21 states. The direct costs are exacerbated by the economic burdens of lost productivity, output, and tax revenue.
Fairness has not been enhanced by the tax code, but lobbyists have been made rich, politicians have been re-elected, and the economy has been made to suffer. Additionally, the American people have lost confidence in their government because of egregious political targeting by the IRS.
Rather than passing a thousand pages of tax reform legislation and restarting the tax code manipulation process, we should change the paradigm. It is time to eliminate the IRS and repeal the 16th Amendment. Tell your member of Congress to co-sponsor HJ Res 104 “Repeal 16.”