A simple fix for tax code

To the editor:

With income tax returns due April 15, it is time to enact real tax reform rather than talk about it. Most people agree the present system is too complicated, but cannot agree how to reform it. A fair income tax system treats all taxpayers equally. Its purpose is to raise revenue to run the federal government rather than promote social policies. This can be achieved by repealing much of the present tax code.

The first change is to enact a single tax rate rather than the present four rates. What you pay should not depend on your marital or living status. Instead, all income should be taxed to the person who earns it. Any state law to the contrary, such as community property laws, should be ignored for the purpose of assessing income tax. This treats all taxpayers equally. I suggest using tax rates of one-half of the present married taxpayer rate as the sole income tax rate. For many taxpayers this will be a significant decrease from present rates.

Many taxpayers have to complete Form 6251 to determine if they have to pay the Alternative Minimum Tax (AMT). The instructions for the form state: “The AMT applies to taxpayers who have certain types of income that receive favorable treatment, or who qualify for certain deductions, under the tax law.” Given the favorable tax treatment of these items, we should simply eliminate all the items on Form 6251.

There are 28 different items listed on the AMT form. These include items most taxpayers understand, such as state taxes, and some which few understand, such as passive activities. The effect of this change would include ending itemized deductions. Since approximately 70 percent of taxpayers take the standard deduction, this change would not affect most taxpayers. Finally, since we would end special tax treatment for all these items, we could get rid of the AMT as there would be nothing left for it to apply to.

Given the ending of so many tax preferences, the changes would likely increase tax revenue even with the rate change to a single income tax schedule. It would be appropriate to adjust the new tax rate brackets downward by the same percentage amount to make these changes revenue neutral, i.e. assess the same amount of income tax as before the changes.

This is a simple proposal that can be enacted by mostly repealing sections of the Internal Revenue Code. It would have the added benefit of making taxes much less complicated so more taxpayers could file their own returns without having to pay someone to compute their income taxes. It does not favor any particular group, but equally hits most taxpayers who benefit from the current loopholes. Congress should enact such changes now.

James Friderici

Willow