Q:

Subject: Stephen Moore's Tax Plan

Mr. Kerstetter,

First let me say thanks to both answering my question about DoD Social Security contributions for military members and then for posting the letter "In the Same Boat" on 2/2 on the socialsecuritychoice.com blog.

Secondly, I went over to your personal blog site and saw three posts about Stephen Moore's postcard tax plan. The original one on 1/30 linking to his WSJ article
The second one on 2/2 by Bruce Bartlett at the Washington Times was negative
The third one on 2/4 by Terry Savage at the Chicago Sun Times was positive.

I was curious about your opinion on the matter or to any other flat tax proposals.

I know you're busy, but would appreciate hearing from you. If you already have a published opinion on the matter, that would be fine if you could send the link.

Thanks

A:

I don't seem to be able to find the time to discuss the various pros and cons of a flat tax in as much detail as I would like.  If you do a search on my blog, you will find several previous mentions of flat tax ideas.

As the articles you cited mention, there are plenty of pros and cons to every taxation scenario, including the various flat tax proposals. 

As should be very obvious in all of my writings, I have always been a big opponent of the graduated tax rate structure in this country that penalizes success.  I have never been shy in pointing out that such a method of wealth redistribution has its roots in the Communist Manifesto, in spite of claims by many on the left claim that it is from our Constitution.  Replacing the punitive rate structure with one single rate would be a great step towards fairness.

What I have long warned about is that it is a fallacy to think that any flat rate tax system would put the IRS out of business or reduce the workload for us tax pros.  The fun and games are with arriving at the taxable income figure.  Figuring the tax, whether with a single rate or the current sliding scale, is the easy part.  To keep everyone honest would still require the IRS to operate just as they do now.  The only way to really get rid of the IRS would be to repeal the 16th Amendment and replace the income and estate taxes with a national sales tax, as proposed under the Fair Tax plan.

Stephen Moore's idea of allowing people to compute their taxes under two different methods and then choose the lower one is an interesting concept that could be a way to make a smoother transition to an easier method.  From my perspective as a tax preparer, I can see that such a plan would create even more work for us, since we would have to prepare two different returns for clients.

If any of the big tax reform proposal ever makes it further than just idle talk, I will probably pipe up with more commentary.

Thanks for your interest.

Kerry Kerstetter

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 2/10/2005 01:36:00 PM Send this post: