4. Ban Tax Deductions, Credits, Exemptions, Pre-Tax Money, & Other Tax Tricks

As a rule, all of these tax reducing methods should be eliminated. The tax code should be kept simple and any exceptions to the code should be kept to a bare minimum, be temporary, and have very valid justifications. Thus, things like charitable giving should not be allowed tax deductions, neither should the depreciation of any assets qualify for tax credits. Under the closing of these loopholes, child tax credits would also disappear, as would tax-free retirement contributions. The tax-exempt status of all non-profit organizations should also be eliminated so that they are required to pay the normal tax rates required of all other economic entities.

All these tax reducing tricks make the tax code too complicated, and this complexity directly causes the following negative effects:

1. Taxpayer frustration due to too many rules to follow and things to research to make sure they are not missing some ‘hidden’ benefits that apply to them
2. An increase in the taxpayer’s amount of time and/or money necessary to figure out and prepare taxes, or to pay to have someone else prepare them
3. Such complexity produces a regressive tendency to the tax code because the wealthy can afford to find the tricks to reduce their tax liabilities while the person holding two or three jobs cannot afford the same luxury
4. Increases the need for completing complicated yearly tax forms that serve as a functional framework allowing all these complex tax rules (tricks) to be woven together with some sort of coherence
5. Increases the ability of special interest groups to dramatically warp (and complicate) the tax code
6. Increases the general lack of faith in the fairness of the tax system
7. Wastes paper, postage and labor

Why have a complex tax code, if a simple one will do the job? The complex one will have higher overhead costs and, because of its complexity, will be perceived (whether correctly or incorrectly) as being inherently unfair. In the end, whether the tax code is simple or complex, the government is going to collect all the money it needs to operate. On average, tax incentives for whatever causes do not result in tax savings, because that just means that everything else will be taxed more to make up for the difference. In addition, these tax incentives work to create unbalanced, unnatural market places. A properly constructed simplified tax code could provide many of the benefits that tax incentives were created to provide.  The tax code needs to be consistent and everything needs to be taxed according to the same rules. Otherwise, the free market will not be truly free to function as intended.

Individual/Joint Tax Return

There should be no such things as joint tax returns. Everyone should file his or her taxes individually and separately.


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