Almost everyone agrees that America’s income tax is too complex. Considering this, you might expect that simplifying the income tax would be a slam dunk. Sure enough, the various presidential candidates have proposed sweeping overhauls. But any agreement is mostly rhetorical. The odds that the next president — whoever it is — will engineer genuine tax simplification are negligible. In the wake of another Tax Day, it’s worth pondering why.
Make no mistake: I think we’d be better off with a simpler system. By this, I mean a system with a broader tax base and lower rates. I’d eliminate most tax preferences and cut the top personal rate (now 43.4 percent) to 30 percent. There would be no preferential rate on dividends, interest and capital gains (profits on the sale of stocks, bonds and other assets) — income enjoyed mostly by the upper middle class and the wealthy. They’d pay as much or more in taxes as today.