Simplify, Simplify

April 15, 1994|By STEVEN EASTAUGH

Berlin, Md. -- It is hard to believe that our nation was founded to avoid excess taxation. In 218 years, we have gone from taxation with representation to taxation without relaxation. Everything we have is taxed, including our patience. What the present tax forms need is a section that explains the explanations.

If we can have health-care reform, why can't we have true tax simplification? The Republicans tried for 12 years to simplify our federal tax system and, after three attempts, the simpler tax system had 41 additional forms. The Republicans simplified tax forms beyond all understanding.

I worked for presidential candidate Robert F. Kennedy in Maryland in 1968, and he had a good, basic reform plan. Kennedy advocated a single tax rate of 20 percent for all individuals.

This neoconservative idea was reminiscent of the old-school conservative definition of liberalism: the central government 0` should not tinker with the social fabric through the tax system. None of the ''Whitewater'' games, including passive losses and questionable deductions, would exist under a flat tax rate -- everyone would pay 20 percent (for all income types). For the vast middle class, earning too much to avoid taxes, and not enough to afford creative deductions, their effective tax rate might decline slightly.

The complexity of the tax system leads to differing interpretations. Two different, honest tax preparers can look at the same facts and come up with vastly different results. We should eliminate all the complex exemptions and deductions and let everyone pay their one-fifth share of the bill. The Earned Income Tax Credit would continue to relieve the tax burden for the working poor.

How would the budget deficit look under the single-tax format? First, the federal deficit would not have existed in 1993; instead we would have had a budget surplus of $29 billion! Second, lower tax-preparation expenses would save the nation $11 billion, not to mention the elimination of millions of hours of living-room frustration time.

To reinvent government by eliminating administrative waste should be a central theme for new Democrats. For example, we can trim the number of health-insurance forms from 1,500 to two, saving at least $25 billion. Rather than multiple forms for each insurance company, we could have one national standard form for patient office visits and one for hospitalizations.

We can also reform the welfare non-system, currently 90 fragmented programs, yielding a net savings of $1.3 billion in annual paperwork costs. These savings could be reinvested in job training and job placement. Elimination of the paperwork jungle is good economics and good medicine for all concerned.

Steven R. Eastaugh teaches at George Washington University.

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