What do professional tax preparers think of the flat tax idea proposed by presidential candidate Jerry Brown?
Not surprisingly, not much. "The more you simplify something, the more unfair it is," complained John Hewitt, president of Jackson Hewitt Inc. "It's basically unfair to charge people the same rate."
Of course, a flat tax would also make it less likely that taxpayers would need professionals such as Hewitt to help them understand the tax laws and to prepare their personal tax returns.
Indeed, former California Gov. Edmund G. (Jerry) Brown Jr. repeatedly says on his campaign stops that under his plan, you could figure your taxes on a postcard.
In his bid for the Democratic presidential nomination, Brown is proposing a flat income tax rate of 13%, together with a 13% "value-added" tax. The VAT, used extensively in Europe, is effectively a national sales tax.
He would eliminate all tax deductions except for home mortgage interest, rent and charitable donations. He would also eliminate most other taxes, including those on gasoline, corporate income and for Social Security.
Critics contend that the flat tax is regressive, that is, it applies the same rate to rich or poor. Brown, meanwhile, counters that the present 4,000-page U. S. Tax Code reflects the many tax breaks that Congress has granted to special interests since the U. S. income tax was enacted in 1913.
Either way, there's no question that the present tax laws are complicated, far more so than in some European nations such as France, where the personal income tax laws are outlined in a 24-page booklet. In contrast, the Internal Revenue Service's instruction booklet for just the standard 1040 form is 80 pages--which keeps the American tax-preparation people in business.
Hewitt and David W. Lieberman, president of the rival tax service chain Triple Check Income Tax Service Inc., say the federal government has always tinkered with the tax laws to produce different economic results.
"Every time there's some change in the economy, there's some congressman proposing an investment tax credit to spur business investment," Hewitt said. "Whenever you do that, you're going to have complexity. I don't see that changing."
Indeed, Lieberman said the government should worry less about simplifying the tax laws, concede that they will always be complicated and instead figure out a way for all Americans to get professional help in preparing their returns.
That way, he added, people would have a more equal chance at having their returns filled out properly and legally. Lieberman concedes that such a policy would also boost his business.