LETTERS: DEEPER TAX ISSUES

To the editor:

In reference to your Jan. 29 editorial: If a simpler, fairer tax code is in store for Americans, it could address more than the simple flat-tax ideas we have seen so far. It is a costly travesty that so much time and energy is needed for compliance with regulations that even the IRS often has trouble interpreting. A simple flat tax is better than nothing, but if we adopt it, we may be missing a golden opportunity to help American business compete in world markets. Our staggering trade deficits and loss of good-paying industrial jobs attest to our need for the additional exports that only business can provide.

Many think that by taxing business heavily, we are reducing the cost of government to individuals. Business must pass all their costs, including taxes, on to their customers if they are to earn profits and stay viable. Therefore, they charge more for the products they sell. So we, the customers, pay to support government one way or another. Politicians want to make us think we are not paying so much in taxes by hiding a large part of the tax burden in the costs of things we buy, forcing corporations to pay a large percentage of total tax revenues. I think business should be exempt from all taxes on profits as well as payroll taxes. However, businesses and many other organizations benefit from special protections afforded by government. As compensation for these benefits, I believe a small tax, probably a fraction of a percent, should be levied on their gross income. With such a minimal tax, not only would their accounting costs be minimized, but business decisions could be made with little regard for tax consequences.

For individuals, tax rates would be based on total income from wages, interest, dividends, rents, pensions, insurance proceeds, gifts, employment perks and welfare. From this we could deduct investments (including the investment part of home purchases), savings, insurance premiums, gifts, education costs and perhaps some medical costs. (Any gifts deducted must be reported as income by the recipients). For households, this difference would be divided by the number of persons in the household to find the tax rate for the group. Persons below some predetermined poverty level would pay no tax. Since people with the highest incomes derive the most in benefits from government and our country's resources, it appears to be fair that they should pay higher tax rates than those who are not benefiting so much. It is not the progressive tax rates that make our system so cumbersome, it is the myriad of deductions and credits.

Although this tax plan may not be as simple as a plain flat tax, it is far simpler than our present system. Not only would it foster savings, investments, home buying, education and giving, but it would help to reverse our negative foreign trade balance.

BENJAMIN G. GOODIER

Jackson