We need to streamline our tax policies

Scott Johnson

Tax Day, April 15, has now come and gone. To my own surprise, though, that is not what has inspired this column.
What sparked this was learning that Independent presidential candidate Sen. Bernie Sanders, Vermont, has proposed his “Medicare for All” plan, which would essentially gut the health care insurance industry and cost $32 trillion.
While I think there is something obviously problematic with the current insurance/health service/pharmaceutical dynamic, I think Medicare for all is a far cry from the solution. However, that’s not what I want to write about.
What caught my attention is that   through Sanders’ plan, the health insurance industry would be dismantled and reduced to providing coverage for elective procedures, such as nose jobs and the like.
My question is if we have an itch to gauge out an industry from the free market, why don’t we start with the tax preparation industry, which is generating $11 billion dollars from Americans on top of the income taxes they are paying the government?
The idea of an industry built around the fact that income tax is so complex and convoluted is crazy to me.  Not to mention, the rules always seem to be changing year after year.
Our tax policies are a jungle of hoops and tunnels, so much so that the average American would never find his way out of them without an expert. The government has essentially subsidized an artificial market.
This is a market that no less benefits from the less intelligent and poor, promoting tax advance loans to syphon off federal tax credits from families and wages from workers who overpaid income taxes.
Are there good-hearted people working in this industry? Yes. Are they are providing vital services given the tax environment that has been instituted? Yes. I’m simply raising issue concerning why the industry is necessary in the first place.
A tax structure that is beyond the comprehension of the majority of taxpayers is also elitist.
Those more fortunate have the resources to pay experts to file correctly and find the loopholes to pay less. Those less fortunate and who have less access to tax knowledge are more likely to file taxes with errors, resulting in audits and penalties.
 Should people be responsible and educate themselves on tax laws so they file correctly? Of course they should. I believe under this current system we need required high school classes dedicated to training students how to file.
But why create the trouble? If we want people to pay taxes, why not streamline the process and make it as easy as possible?
A map of IRS audits from 2012-2015 shows a stark streak of a substantial amount of audits correlated with the Black Belt—counties which historically have higher rates of poverty.
Some are calling this proof of institutional racism. I call it proof of poor tax policy that disenfranchises the taxpayer—especially in underprivileged areas.
According to experts, this is due largerly to more filers in these areas claiming the Earned Income Tax Credit, which provides a low-income household with several thousand dollars on a tax return.
The reason being that those who claim the credit  are more scrutinized as some claim the credit in error.
People already hate taxes for the simple fact they are required to pay them. Why make it even worse by making it confusing and auditing those who are more likely to file incorrectly? We need to streamline taxes.
The State of Alabama recently did this with statewide online sales and use tax, through its Simplified Sellers Use Tax Program.
Taxes off online sales in Alabama were nearly impossible to recoup as online retailors were trying to figure out the tax rates for the state,  67 counties and 460 municipalities.
This was a burden to the point where many online retailors simply couldn’t comply. Instead of forcing the retailors to adapt and learn to navigate the complexity of the tax rules, our state Legislature decided to create a flat rate of 8% sales tax for online taxes.
The tax rolled out last year and  proved simple enough that more than 230 online stores were voluntarily filing prior to the Oct. 1, 2018, mandate.
It’s not too far-fetched to streamline our tax system and garner more tax participation.
A flat tax or strict consumption tax would all but do away with the Internal Revenue Service (IRS) and make paying taxes easy.
Would having no federal income tax be realistic? Nine states—Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming—already don’t pay a state income tax.
According to the American Legislative Exchange Council, over the past decade, these nine states have outperformed the nine states with the highest taxes on personal income.
I personally like the idea of a consumption tax and believe that it would be the best way to stem tax evasion.
Plans such as the Fair Tax would eliminate all corporate, personal, gift and estate taxes and replace it with one national consumption tax on new purchases—above poverty level only.
Americans would keep every dime they make and essentially choose to pay taxes when they choose to make purchases.
In theory, with workers taking home more in their paychecks, they will be liberated to spend more in the marketplace.
No more complicated tax forms, individual audits or intrusive federal bureaucracy.

If we’re dead-set on undercutting an industry, our politicians should have their aim at the IRS-incentivized tax prep industry, not privatized health insurance.