Posted: Jun 17, 2005 By: Kasey Duncan

Subject: Flax Tax NOT Consumption Tax

Comment: I have several comments on the effort to simplify the federal tax system.

1. The current system is broken, that is a given.

2. The current system still includes many “marriage tax” elements, e.g., the $3000 capital loss limitation whether the taxpayer is single or married filing jointly. This is a personal gripe of mine.

3. A consumption tax will burden the retired taxpayers. These people have paid taxes all their lives. Now they have less income and must live on their savings and pensions. Their expenses remain the same or are sometimes even higher in their later years, due to increased needs and inflation. A consumption tax would mean that people caught in any transition would have paid tax on their income all their working lives then pay double tax when the previously tax savings is used for living expenses. This is intrinsically unfair.

4. A flat tax would reduce the paperwork burden, ease tax planning by knowing the amount of tax in advance, and be fairly applied to everyone.

5. A flat tax is a truly progressive tax. The rich always pay more and the poor always pay less. That cannot be said of our current system, nor could it be assured with a consumption tax.

There is no real alternative to a flat tax because there is little reason to trust the government. The temptation to not revoke the 16th Amendment would be too great for our politicians, and a consumption tax would become our second tax system, not our only one. I believe this risk is too great.