- The Washington Times - Wednesday, April 17, 2002

When President John Adams described the American Revolution, he referred to it as a "radical change in the principles, opinions, sentiments, and affections of the people." For the past few years, I believe another revolution has been quietly taking root in the hearts and minds of the American people and the communities of the United States. Americans are increasingly disgusted with a federal income tax system that is arbitrary, unfair, cumbersome and burdensome. Across the country, many of these Americans are banding together to demand change, and they are looking to Congress to respond.

Surveys consistently and overwhelmingly indicate Americans' dissatisfaction with the federal tax code. One poll discovered that nearly 60 percent of Americans were dissatisfied with the system, and a full 64 percent wanted major changes or a complete overhaul of the code. Another poll even found that more Americans are afraid of an IRS audit than of anthrax. Clearly, Americans are ready for reform.

Fundamental tax reform is vital if we as a nation are to continue to grow and prosper. Tax complexity and tax compliance costs increase each and every year. Currently, Americans spend more than $250 billion annually complying with the code. This amounts to nearly $900 for every man, woman and child in America. Further, taxpayers with less than $50,000 in adjusted gross income, who represent less than 20 percent of the population, pay almost 60 percent of the total compliance costs for individuals.

Unfortunately, however, most of us are hardly aware of the tremendous burden that tax complexity imposes, a burden that largely manifests itself in higher consumer prices. On average, between 20 percent and 25 percent of the price of consumer goods is the price of our tax code, tax compliance and tax avoidance. For example, one dollar's worth of gasoline includes 48 cents in taxes and a $1.14 loaf of bread includes 35 cents in taxes. Studies have shown that, if we simplified our system through fundamental tax reform, we would eliminate this component in the price system and thereby increase purchasing power by more than 20 percent.

An equally distressing component of our current tax structure is its intrusion into nearly every aspect of American life. Through countless credits, exemptions and excise taxes, Congress has sought to influence personal choices ranging from work to health care to savings, spending and investment decisions. The result is that many taxpayers find themselves describing their lives in greater detail and revealing more intimate information to the IRS than they would to own children or parents.

A recent study by the General Accounting Office found that as many as 2.2 million tax returns failed to take into account many standard deductions such as mortgage interest payments, charitable contributions, and state and local income taxes resulting in an overpayment of nearly $1 billion in taxes. This is a striking statistic, especially after considering that approximately half of those returns were prepared by a tax professional. As a result of the failure to itemize, many Americans overpay their taxes by an average of more than $400, and a quarter of taxpayers overpaid by more than $500. One certainly must consider whether the complexity of the code, along with the forced disclosure of personal information, is at the root of the costly decision to not itemize.

While it is clear that the federal income tax system must be reformed, it is less clear how we should go about enacting such change. Congress is currently considering several proposals that would fundamentally alter the income tax system, including proposals for a flat tax on income or a national retail sales tax. These bills all share some common components, and we must look to preserve these principles as we continue to debate this issue. All fundamental tax-reform proposals should be fair, simple and transparent; they should also increase economic growth and personal freedoms.

If Congress remains faithful to these principles, we can enact fundamental tax reform that would dramatically improve the quality of life for Americans. True reform proposals will result in an increase in gross domestic product, exports, savings, investment and take-home pay; the stock market would grow exponentially; consumer prices, interest rates and compliance costs would all fall dramatically.

More importantly, however, the enactment of tax reform would revolutionize our expectations of government. We could announce loudly and clearly that we have heard America's cries for relief and are willing to enact change. A government of the people and by the people is extraordinary, but a government that is also responsive to the people is noteworthy in today's political climate. Through a substantive dialogue that results in fundamental tax reform, Congress could demonstrate that it is not only Americans who are capable of revolutionary thought and change, but also their government.


Rep. John Linder is a Republican from Georgia.

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