Cut Our Tax (Filing) Burden by Half

Few things in life are certain, death and taxes being the two most often cited. The arrival this week of my W-2 form reminded me of the certainty of the latter.

I really don’t mind paying my fair share of taxes, as I consider it an acceptable price for living in our democracy. What I do mind is that filing a return is a complicated nuisance that forces many people to seek professional help (no, not the psychiatric kind).

So, as a public service, I’d like to offer a suggestion to the president for spending his political capital: Eliminate the federal tax code entirely. No, I’m not a member of the Flat Earth Society or even the Flat Tax Society, if there is one. I’m just suggesting a simpler way to fund the federal government: pay our combined income taxes only to our state of residence, and then let each state worry about doling out the federal share.

Think about it. If only a single income tax is paid to the state (obviously at a higher rate to reflect the combined state and federal funding requirements), the need for a Byzantine federal tax code and a dysfunctional bureaucracy like the IRS to administer it is eliminated. This could save billions of dollars each year and remove thousands from the federal payroll. A single junior deputy assistant undersecretary with a two-person staff in the Treasury Department could probably take care of everything. After all, there would be only 51 federal taxpayers to look after (can’t forget D.C.).

State governors would gain the ability to pressure the federal government to rein in spending in order to minimize the tax burden on their constituency. They would also have greater leverage with which to ensure that the federal tax burdens of their states were commensurate with the services provided, especially here in California, where Gov. Arnold Schwarzenegger says we pay far more than our share.

One can only imagine the myriad benefits to all of us as individual taxpayers. For example, there would no longer be a need to fork over $100 to a tax preparer to file your federal return. And the cost of the state return shouldn’t change, for the number of forms would be the same; only the dollar amounts in the “tax due” box would be larger. Those of us who do our own returns could finish in half the time, and refunds would be received much sooner because the friendly folks at the Franchise Tax Board are always quicker than the IRS.

Of course, every good idea comes with a downside. Unemployment would increase because of out-of-work lawyers, accountants, lobbyists, tax preparers and IRS employees. Members of Congress would complain because having a federal tax policy to manipulate is a major source of pork. But long-term gain is rarely achieved without some short-term pain. And who among us wouldn’t gain by inflicting a little pain on a few tax collectors and lawyers?