Thank you, Estonia

Tiny Estonia has shown us how to do it. A few years ago they adopted a low, flat tax rate on income. All taxpayers are given the same rate. All items of income are taxed at the same rate. Corporate profits have the same rate.

This has been a remarkable success. Tax receipts have been higher than expected. Estonia’s economy has turned around. It has become one of the most prosperous countries in the world.

Other nations in central Europe have done the same thing. Everywhere tried, the idea has been a success.

Let’s hope that our Congress is watching.

In 1913, when we began the income tax, the well-to-do and upper middle-income folks were affected. No one else was bothered. But when World War II began, the government needed lots of money. The income tax became a common problem. We have never returned to the original idea.

From the very first, the income tax law has been needlessly complicated. We have never had one set of tax rules that apply to all taxpayers. Instead we have rules that apply generally but other rules apply under certain conditions. In the case of itemized deductions, taxpayers may use them by choice, instead of using the standard deductions and personal exemption.

We always have several income brackets with the tax rate on each progressing upward as incomes increase. Folks with high incomes are supposed to pay a high tax rate, but these people usually choose to itemize deductions which provide ways to avoid taxation.

Changes are made in IRS form 1040 every year and every year it seems to get more complicated. It is long past the point of being difficult. It is incomprehensible. It wastes our time and costs far more to collect than it should.

The income tax law should be trashed and replaced by one using the idea from Estonia.

Simply add up the income and deduct the amount allowed for the personal or family deduction. Take 15 percent of the result and pay it to Uncle Sam.

With a 15 percent rate we should be able to eliminate the estate tax and reduce the corporate profits tax to 15 percent. This package should be very good for the economy.

Everyone would play by the same rules. No way would be provided to avoid the tax. No itemized deductions would be allowed. The only exception would be the interest that people receive on municipal bonds.

There is a simple way to calculate the deduction allowed. Give all adults, 18 and older, an annual deduction of $8,500. Give minors, those under 18, half of that amount. A family’s deduction would be the total allowed its members. The amount should be adjusted annually for inflation.

Among the many benefits resulting from taxing this way, the IRS would become smaller and less expensive. Also, its simplicity should make it possible for us to get a better understanding of how tax rates affect the economy.

Now, most Republicans have one theory, and Democrats have another. Both cannot be right. The answer is made more elusive by having a complicated tax code. We can change that. We should do that.

Let’s do it. The sooner the better. Thank you, Estonia.

Max O. Dickey

Sun City