Editor's Note: Be sure to catch Fareed Zakaria GPS on CNN every Sunday at 10am and 1pm ET.
By Fareed Zakaria, CNN
We’re going to hear a lot of polarized rhetoric over the next few months. The Republicans and Democrats will seem to disagree about everything. But there is one huge and important area where there is a possibility - a possibility - of bipartisan action and that’s tax reform.
Most Americans - Republicans and Democrats - dislike the tax code. They’re right to do so. America has what is arguably the world’s most complex tax code. The federal code plus IRS rulings is now 70,000 pages long. The code itself is 16,000 pages. The statist French, for example, have a tax code of only 1,909 pages - only 12% as long as ours. And then there are countries like Russia, the Czech Republic, Estonia that have innovated and moved to a flat tax, with considerable success.
You have to understand, complexity equals corruption.
When John McCain was still a raging reformer, he used to point out that the tax code was the foundation for the corruption of American politics. Special interests pay politicians vast amounts of cash for their campaigns and in return they get favorable exemptions, credits or loopholes in the tax code.
In other countries this sort of bribery takes place underneath bridges and with cash in brown envelopes. In America it is institutionalized and legal but it is the same thing: Cash to politicians in return for favorable treatment from the government.
The U.S. tax system is not simply corrupt, it is corrupt in a deceptive manner that has degraded the entire system of American government. Congress is able to funnel vast sums of money in perpetuity to its favored funders through the tax code without anyone realizing it.
For those who despair at the role of money in politics, the simplest way to get the corruption out of Washington is to remove the prize that members of Congress give away - preferential tax treatment. A flatter tax code with almost no exemptions does that.
The simplest fix to our tax code would be would be to lower the income tax dramatically, lower the corporate tax, and instead raise revenues through a national sales tax, or a value-added tax (VAT).
The U.S. is the only rich country in the world without a national sales tax. Germany has one at 19%, Britain at 20%, Korea at 10%.
What’s the appeal of a consumption tax?
First, it is efficient. Most studies, including one by the Internal Revenue Service (IRS), suggest that the federal government loses several hundred billion dollars a year to tax fraud. This is much tougher to pull off with a consumption tax. Second, it provides the government with a more stable form of revenue than income taxes. Income taxes fluctuate greatly between boom and bust years. Third, American’s consume too much, often using credit and leverage to do so. A consumption tax would moderate this behavior. Government will always get less of a behavior it taxes and more of what it subsidies.
Ironically, the heavy reliance on income taxes makes the American system more progressive than those in Europe. The federal government gets about 43% of its total tax revenue from taxes on individual incomes and profits, compared with only 29% in Germany and 22% in France. The balance for France and Germany comes from the VAT, which is highly regressive. One recent OECD study showed that the top ten percent in America pay a larger share of total taxes, 45.1%, than do the top ten percent in any of the 24 countries examined. In Germany they pay 31% of the taxes, in France 28%.
But the best thing about tax reform is that it kills corruption. So if you ask me what kind of tax code I am in favor of, I am in favor of almost any new tax code that fulfils one requirement: It should fit on two pages.
Оконный отлив является важной состовляющей оконного проема и пригоден для отвода воды otliv-sm.ru/otliv.html Срочность в исполнении заказов, обусловленную найвысшей производительностью нашегопроизводства.
I really enjoyedthe content here and I think your site is great. If you woud like I will tell others about it in my ezine. Keep up the good work.
Terrific work! That is the kind of information that are meant to be shared around the web. Disgrace on the seek engines for not positioning this put up higher! Come on over and seek advice from my website . Thanks =)
Hey very nice web site!! Man .. Beautiful .. Amazing .. I will bookmark your site and take the feeds also?I am satisfied to seek out so many helpful info right here in the put up, we want develop extra strategies on this regard, thank you for sharing. . . . . .
I simply couldn't leave your website prior to suggesting that I extremely loved the standard information an individual supply to your visitors? Is gonna be back often in order to inspect new posts
The Global Public Square is where you can make sense of the world every day with insights and explanations from CNN's Fareed Zakaria, leading journalists at CNN, and other international thinkers. Join GPS editor Jason Miks and get informed about global issues, exposed to unique stories, and engaged with diverse and original perspectives.
Every week we bring you in-depth interviews with world leaders, newsmakers and analysts who break down the world's toughest problems.
CNN U.S.: Sundays 10 a.m. & 1 p.m ET | CNN International: Find local times
Buy the GPS mug | Books| Transcripts | Audio
Connect on Facebook | Twitter | GPS@cnn.com
Buy past episodes on iTunes! | Download the audio podcast
Check out all of Fareed's Washington Post columns here:
Obama as a foreign policy president?
Why Snowden should stand trial in U.S.
Hillary Clinton's truly hard choice
China's trapped transition
Obama should rethink Syria strategy
Enter your email address to follow this blog and receive notifications of new posts by email.
RSS - Posts
Get every new post delivered to your Inbox.
Join 4,853 other followers