Posted: Apr 24, 2005 By: Richard Smith

Comment: http://www.latimes.com/business/investing/la-fi-perfin24apr24,1,6229669.colu
mn?coll=la-utilities-business-money&ctrack=1&cset=true

I've just read the above column in the LA Times, and here is my suggestion,
in bare bones form:

Institute a flat income tax, such as the ones recently introduced in Russia
and Ukraine.

Apply a single rate to taxpayers of all incomes and to corporations as well.

Set the rate such that it is revenue neutral.

Eliminate all deductions and credits so that, in essence, the tax return can
be filled out in minutes on a postcard-sized form.

Maintain progressivity of the tax "rate" by rebating to lower-income
taxpayers X amount of tax paid.

To make the transition gradual, make it voluntary. Individuals and
corporations that wish to live under the current tax system should be given
up to, say, 10 years in which to switch over to the new. That should give
time for the housing industry and housing prices to adjust to the
elimination of the home mortgage deduction, give H&R Block and similar
companies time to move into new business, and generally ease the shock of
transition for all concerned.

Finally, begin the process of amending the Constitution to require a
supermajority vote of Congress to introduce any new deductions, credits or
similar loopholes that would undue the good of the reform. To deal with
changing needs for revenue over time, however, permit the raising or
lowering of the base tax rate itself according to the current voting
procedure.

Regards,

Richard Smith
Falls Church, VA