Simple, you just don't have any deductions. Or narrow it down to a handful of deductions. The loopholes are not sending in false information to the IRS about how much you made. The loopholes are all the deductions that some know to take and others don't.
For example, I know I make the same amount as another guy at work. We both rent (no mortgage deduction), neither of us have student loans, neither of us are married, and neither of us have kids. We both spend about the same on living expenses, loans, etc. We both file the same way and work for the same employer in the same job. But he used TurboTax and I hired a professional tax accountant. I got almost $2,000 more back on my refund last year than he got.
Roughly the only difference between us was who prepared our taxes. Obviously my tax accountant leveraged more deductions for me than TurboTax did for him.
If there were no deductions, it would be quite simple. Take a certain percent of your income and deduct it to the government and that's it. The deductions cause all the problems.
Now what are the other options?
The flat tax/high sales tax sounds good in theory, but it sucks in practice. We need roughly 20% of GDP for taxes. So 20%+ sales tax on everything? If I'm buying a yacht, or a vacation house, or an airplane why would I buy it in America? Simply put, nobody would. But if you have to buy dinner, buy clothes, put gas in your car, you have to buy that locally. So that kind of tax kills people on the necessity and doesn't impact people on the luxuries. Of course the answer is to give a 'necessities' refund, which would force the actual rate to be raised even higher. Do you think anyone is buying a luxury item in the US when the sales tax is 35%?
You can strike out the idea of a luxury tax, we've tried it and it failed spectaculary.
High property taxes would put a permanent end to any kind of housing market recovery.
Corporate taxes are even less workable than income taxes.
And it has been shown that spending is far more flexible than income. I.e. we often hear the argument that people move to low tax states (which mostly they don't, but let's say conservatives are right and they do), which is easier, taking your vacation to a non-US destination or getting your company to move out of the country? Income is fundamentally less flexible than spending.
Any of the other plans come out really regressive. The best way to capture tax revenue fairly is through income tax, if you eliminate the loopholes it should capture nearly everyone equally.
For example, I know I make the same amount as another guy at work. We both rent (no mortgage deduction), neither of us have student loans, neither of us are married, and neither of us have kids. We both spend about the same on living expenses, loans, etc. We both file the same way and work for the same employer in the same job. But he used TurboTax and I hired a professional tax accountant. I got almost $2,000 more back on my refund last year than he got.
Roughly the only difference between us was who prepared our taxes. Obviously my tax accountant leveraged more deductions for me than TurboTax did for him.
If there were no deductions, it would be quite simple. Take a certain percent of your income and deduct it to the government and that's it. The deductions cause all the problems.
Now what are the other options?
The flat tax/high sales tax sounds good in theory, but it sucks in practice. We need roughly 20% of GDP for taxes. So 20%+ sales tax on everything? If I'm buying a yacht, or a vacation house, or an airplane why would I buy it in America? Simply put, nobody would. But if you have to buy dinner, buy clothes, put gas in your car, you have to buy that locally. So that kind of tax kills people on the necessity and doesn't impact people on the luxuries. Of course the answer is to give a 'necessities' refund, which would force the actual rate to be raised even higher. Do you think anyone is buying a luxury item in the US when the sales tax is 35%?
You can strike out the idea of a luxury tax, we've tried it and it failed spectaculary.
High property taxes would put a permanent end to any kind of housing market recovery.
Corporate taxes are even less workable than income taxes.
And it has been shown that spending is far more flexible than income. I.e. we often hear the argument that people move to low tax states (which mostly they don't, but let's say conservatives are right and they do), which is easier, taking your vacation to a non-US destination or getting your company to move out of the country? Income is fundamentally less flexible than spending.
Any of the other plans come out really regressive. The best way to capture tax revenue fairly is through income tax, if you eliminate the loopholes it should capture nearly everyone equally.