Simple Tax, Fair Tax
It's that time of year again -- when millions of Americans begin the mind-numbing chore of doing their taxes. Once again, they'll collect W-2 forms and call for missing 1099s, sift through shoeboxes for receipts and cancelled checks. The typical taxpayer needs more than 30 hours to complete this process, struggling to comprehend a tax code that contains more than 10,000 sections. That's why taxpayers spend more than $100 billion annually on tax preparation. But it doesn't have to be this way.
We have proposed the Fair Flat Tax Act, which would require most taxpayers to fill out a simple, one-page Form 1040. There would be just three personal tax rate brackets -- 15%, 25% and 35% -- instead of the current six. Gone would be the maze of regulations and loopholes. The tax code would receive what it desperately needs: a good cleansing.
And it should not just be simpler, but fairer as well -- especially for the middle class. Under the current system, a police officer walking the beat pays a higher effective tax rate than someone who makes their money from capital gains and dividends. The policeman who makes $70,000 in annual wages pays almost 25% of that salary to the federal government, while an executive who makes five times that in capital gains pays just 15%. Today's tax code has not just become anti-middle class, but anti-worker. Wealth and work should be treated equally.
There are other ways to help the country's middle-class families. By eliminating the Alternative Minimum Tax, which our plan does, we can put an end to the process that forces millions of Americans to do their taxes twice. These measures can help taxpayers without eliminating the incentives used most by the middle class: home mortgages, retirement savings and education.
Our aim is not to soak the rich but to make the tax system fairer. Every American has a right to build and grow wealth. Eliminating the unfair ways wages and investment income are currently treated can allow markets -- not government -- to drive our country toward the best use of investment capital.
Can we afford fundamental tax reform, given our record deficits and tight budgets? We believe America can't afford not to reform. And it can be done without exploding the deficit. By eliminating scores of tax breaks for the fortunate few, reforming the corporate code, and refusing to renew the disproportionate Bush tax cuts, we can give significant relief to those who really need it -- and cut the deficit by $100 billion.
Every year, the tax rigmarole takes more time and leaves more Americans more frustrated. It's time for a change. If we make the tax code easier and fairer, come Tax Day, more Americans will have more sanity, more freedom -- and more money.
Mr. Wyden is a Democratic senator from Oregon and a member of the Senate Committee on Finance. Mr. Emanuel is a Democratic congressman from Illinois and a member of the House Ways and Means Committee.
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