March 24th, 2012
03:43 PM ET

Zakaria: America needs a 2-page tax code

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.

soundoff (489 Responses)
  1. zortilonrel

    Great weblog right here! Additionally your web site so much up fast! What web host are you using? Can I get your affiliate link to your host? I wish my website loaded up as quickly as yours lol

    December 19, 2020 at 8:05 pm |
  2. zortilonrel

    Thank you for another fantastic article. Where else could anyone get that kind of information in such an ideal way of writing? I've a presentation next week, and I'm on the look for such info.

    December 20, 2020 at 10:01 am |
  3. Devin Bohner

    Super share it is actually. We have been awaiting for this tips.

    December 20, 2020 at 6:20 pm |
  4. zortilonrel

    I want forgathering useful info, this post has got me even more info! .

    December 21, 2020 at 9:54 am |
  5. zortilonrel

    You really make it appear really easy with your presentation but I to find this topic to be actually something that I think I would by no means understand. It sort of feels too complicated and extremely vast for me. I'm taking a look ahead to your next submit, I¦ll attempt to get the grasp of it!

    December 21, 2020 at 10:42 am |
  6. zortilonrel

    I appreciate your work, appreciate it for all the great content.

    December 21, 2020 at 10:32 pm |
  7. zortilo nrel

    Enjoyed looking at this, very good stuff, regards.

    December 22, 2020 at 7:39 am |
  8. zortilo nrel

    Thanks for the sensible critique. Me and my neighbor were just preparing to do a little research on this. We got a grab a book from our area library but I think I learned more from this post. I am very glad to see such fantastic info being shared freely out there.

    December 22, 2020 at 6:11 pm |
  9. Jose Lawson

    The apex stock to actually purchase for 2021 range with small-cap diamonds in the rough similar to URBT to dominant growth stocks. In the event you have $500 free currently, the following revolutionary stock would be great for opportunistic long-term buyers. Urban Television Network Corp stock OTC: URBT. I don't what you think, nonetheless once I think of technology, streaming services stocks spring to mind. Covering the past decade, we have now witnessed extraordinary advancements in internet streaming bit rates along with devices which have been developed to support those services. We now have seen major streaming services similar to HBO & Hulu snag market share, except this little known corporation Urban TV Network Corporation. have introduced awesome streaming services URBTPlus. I believe this company is going to corner the urban internet streaming markeplace. The stock market forever has a few surprises waiting for you, each and every shareholder in 2020 would indicate. URBT continues to be astonishing having a 300 increase over 12 months. But by & large, the principal element professionals are looking at it as they discover the best stocks to get for 2021 is the same variable that dominated 2020: Corona Virus. And internet streaming service URBTPlus is addressing the call. So as an opportunist have a look at Urban TV Network Corp. stock symbol URBT. #invest

    December 26, 2020 at 11:53 am |
  10. Tamala Bietsch

    I have a hosted WordPress blog. For some reason, my blog posts are being sent out to followers of another blog. The other blog owners uses Blogger. We can figure out why or how this is happening?.

    January 2, 2021 at 7:59 pm |
  11. Roosevelt Camire

    Highly Concentrated (so you use less and save money)

    January 2, 2021 at 10:59 pm |
  12. Fgvdwhilk

    canada rx pharmacy drug store canadian pharmacy reviews

    January 9, 2021 at 4:30 am |
  13. Fwsxalkat

    best drugstore eyebrow pencil treatment for erectile dysfunction best drugstore setting spray

    January 9, 2021 at 7:48 pm |
  14. Leanna Pless

    How to ban a person from a blog on blogspot?

    January 9, 2021 at 11:56 pm |
  15. Nllpwhilk

    canada rx pharmacy ed meds online without doctor prescription

    January 10, 2021 at 9:45 am |
  16. Khthweep

    medicine for erectile pharmacies best canadian online pharmacy

    January 12, 2021 at 5:58 am |
  17. Jtmfalkat

    online pharmacy us online pharmacy ed pills online

    January 12, 2021 at 7:58 am |
1 2 3 4 5 6 7 8 9

Post a comment

You must be logged in to post a comment.