Saturday, April 18, 2009

Tax Reform Needed, in Addition to Tax Cuts

One of the sub-themes of the Tax Day Tea Party Protests against the expansion of the federal government has been that the federal tax code has grown too complicated.

Because of the complexity of the tax code, it is difficult to be certain that one is in compliance with it. Plus, the tax code is costly, both in terms of time and money. Furthermore, the complex code provides opportunities for special interests to lobby for favorable changes, meaning that the federal government gains increasing influence over commerce, while special interests gain increasing influence over lawmakers. Either a flat federal income tax or a federal sales tax is necessary to replace the current code, with the provision that only one or the other be levied, not both.

Barak Obama's mortgage bailout plan, whereby those who bought homes beyond their ability to pay and, in some cases, even lied about their creditworthiness, would be bailed out by those who lived within their means, is what sparked the initial public outrage. CNBC's Rick Santelli, upon the Obama Administration's announcement of the mortgage bailout, suggested on the floor of the Chicago Mercantile Exchange that Americans throw tea parties, like they did during the American Revolution, to protest the bailout. Americans fed up with federal government bailouts have been using the protests to vent their frustration not only over the unfair mortgage plan that rewards bad behavior, but the massive growth of the federal government, with its concomitant increased spending, borrowing and taxing.

The effectiveness of these tea party protests can be judged by the hostile reaction from liberals, including in the media. Some of the media have ignored the story of the protests altogether, while others have been questioning the motivations and the funding of the protesters -- something they hardly ever do over the usual liberal protests. Liberals try to dismiss the protesters by pointing out that this April 15, taxpayers were paying last year's federal income tax, as if we were ignorant of this fact. April 15 was chosen as the date for most of the protests because of its symbolism. The tea party I attended was thrown at the post office, in order to take advantage of the opportunity of being seen by taxpayers were arriving to file their tax returns. There will probably be more tea parties thrown on July 4.

Conservatives have wisely taken this opportunity to promote tax reform, in addition to tax cuts. Now is the time for conservatives to resist too much federal intrusion in the economy by promoting spending restraint, as well as tax cuts and tax reform.

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