Tax changes need spending reform too

Every American is a taxpayer, regardless of income. In fact, many Americans with no earned income at all pay taxes whenever they take money they receive from other sources and spend it on items subject to sales and other taxes.

Americans pay taxes in a variety of ways. Most everyone is familiar with sales taxes on items you buy at a store. But if you look closely at your telephone bill, you'll find that you're paying taxes for that service too. And utility bills show taxes being collected for one level of government or another.

In addition, there are taxes on corporations, fuel taxes and taxes on personal property like automobiles and motorboats.

On the federal level, the biggest tax of all is the income tax. Most states collect income tax too.

In 1986, the federal government went through a process called "streamlining" the IRS Tax Code. Accountants who specialize in tax matters had a field day with the new rules and regulations. Since then, literally thousands of changes have been made. Today, federal tax guidelines are more complicated than they have ever been in the history of our nation.

Over the years, there have been many attempts to truly simplify the federal tax code. But it's not as easy as it looks, and the politics of taxation is overwhelming.

The U.S. Treasury Department, at the behest of the Bush administration, is looking at ways to rejigger the country's tax system, which collects $2 trillion (yes, trillion) a year.

The aim, however, isn't necessarily reduced taxation, although certain groups of Americans might, indeed, wind up paying less -- at least for a while. This latest round of tax reform is being conducted without an accompanying reform in the federal government's spending habits.

As many states have recently demonstrated, the era of bloated spending -- as long as a strong economy was producing skyrocketing revenue increases -- cannot go on forever. The current economic sluggishness has clearly shown the train wreck that's likely to occur when unchecked government spending comes around a bend in the tracks and sees diminishing tax revenue coming from the other direction.

That being said, there is a clear need for tax reform. It has been proven time and time again that certain tax policies benefit Americans in many ways -- including the well-tested policy of cutting taxes to produce economic growth and, at the same time, ample revenue to pay for government.

Some of the options under review at the Treasury Department have been floating around for quite awhile: national sales tax, a single-rate income tax and a value-added tax. Strong cases can be made for any of these ideas.

But tax simplification has been an elusive goal. And it certainly will never happen as long as elected officials continue to use a byzantine tax code for political advantage.

Perhaps most importantly, any changes in the way we pay taxes needs to be accompanied by a reform in government spending.