It should not have taken a leak of part of Donald Trump’s 20-year-old tax returns to highlight what’s wrong with America’s tax system. For decades US citizens have felt the acute unfairness. Who hasn’t looked at their tax refund and wished there was a way to escape the burden?
The way the tax code is written now people like Donald Trump — and all other Americans who suffer through a year of business losses – are allowed an escape. They get to deduct the amount of their business loss from future tax liability.
Trump did not break any laws when he claimed a reported $916 million business loss two decades ago. He took advantage of what any other business person who has gone through a rough patch is afforded. Granted, his write-off was much bigger than most. But let’s get past Trump’s taxes. Let’s talk about the system itself.
The tax code we all labor under was first put together in 1939. There were some major revisions added in 1954 and 1986. And, naturally, over the years it has been tinkered with.. At last count the Internal Revenue Code is about 4 million words long. It is so full of archaic and inane regulations I dare say there isn’t one person in Washington who can be considered an expert on it.
It’s time for a complete overhaul of the US tax system.
Like many Americans I cannot decide who to vote for in November’s presidential election. To put it in the nicest terms I can muster: I find both Hillary Clinton and Donald Trump lacking in the attributes I want in a Commander in Chief. But if either comes up with a concrete proposal to make our tax system more simple and equitable I’m there.
Here’s a few starter suggestions. Number one, let’s go after everyone who owes back taxes and if it all possible get them to pony up. What a concept! It was reported last year, for example, that government workers owe a collective $3.5 billion in unpaid taxes. Gee, it’s not like Uncle Sam doesn’t know where these people work – they work for the government!
Next, a newly released study of Fortune 500 companies concludes that trillions of dollars in corporate earnings are currently being held in off shore accounts and sheltered from U.S. taxes. According to three consumer and taxation groups if all those companies paid up on their protected profits the US Treasury would get a stupendous $717.8 billion windfall.
That’s a lot, but realize our deficit is currently running at almost $20 trillion.
Only candidate Trump seriously discusses the need to get American companies to stop with this tax dodge but he fails completely in explaining how he would change things.
And finally, since my space here is limited, I will offer up my favorite idea: A flat tax. An across-the-board tax on individuals and profitable businesses. Everyone paying something, no one getting away with paying nothing. Add in a break for families under the poverty level but have everyone else pay, say, 10 or 15% of their earned income for the year. About the only palatable exception, to my mind, would be the mortgage interest deduction since that is already calculated in to the price of a home. Imagine, more Americans chipping in, no one able to skirt their tax responsibility. It couldn’t help but be a more equitable system.
This would require a complete overhaul of our massively complicated tax system and I wonder if there is a politician alive who has the guts to propose and push through such a program. It could be one of the most important economic stimulus measures this country has ever seen.
But we have two candidates running for president who have forgotten what it’s like to live paycheck to paycheck.
Donald Trump says he is worth hundreds of millions, or is it billions, or is it a gazillion dollars? No one knows for sure and even if he were to release his full income tax returns we still might not be able to figure it out.
Hillary Clinton once famously moaned that she and her husband left the White House in 2001 “not only dead broke, but in debt.” The Clintons are now worth an estimated $111 million.
I’ll bet dollars to donuts that the tax preparers for both the Clintons and the Trumps take advantage of as many IRS loopholes as legally possible.
So, no matter how much either candidate talks about wanting to help average Americans, they have no personal incentive to erase the U.S. tax code and start over again.
That’s a damn shame. The country would be better for it.