Tax code

Finally, Bush started to talk about simplifying the horribly complicated U.S. tax code. The tax code is too convoluted in many countries and the U.S. are certainly no exception. There are various ambitious proposals in the U.S., for example

• http://fairtax.org/

that intends to abolish the income tax and the IRS altogether, so that all the revenue would come from a (higher) sales tax. While many details have to be worked out, I think that this idea in general is a step in the right direction.



Also, the idea of a flat tax is a very good idea. Recently, Mr. Dzurinda's right-wing Slovak government introduced a flat 19 percent tax in that post-socialist country. It's a huge success. The revenue is 10 percent higher than the expectations. Moreover, Slovakia is one of the fastest growing countries in Europe today.

Similar success stories of the flat tax can also be found in Estonia and, in fact, also in Russia. What I find most irritating is the huge number of various tax deductions and other loopholes - that are used especially by those who have the stomach to study the 3,000 or 60,000 pages (depending on how you count it) of the tax code in order to generate personal profit (or who can afford to hire a tax adviser). For example, home mortgage tax deductions. All these things look like unfair rules incorporated to the tax code by various interest groups. Most of these ad hoc things should be cancelled kind of immediately, I think. Hundreds of pages of the tax code that allow these loopholes could simply be thrown to the garbage bin. The tax code would get simplified; good people would save their time and nerves by avoiding hundreds of pages of useless code; the people who prefer to earn money by making tricks instead of doing something useful would have to do something more useful; the budget deficit would shrink.