Tax Simplification: The Impossible Dream

This article has six sections. The first discusses demands for simplification and the various barriers to achieving this. The second explores the possible effects of simplification on equity and certainty. This is followed in the third section by a discussion of research which suggests that taxpayers' perceptions of the tax system are often illogical and inconsistent. Section four identifies one of the most intractable barriers--that there may often be a contradiction between the collective interest of taxpayers and their personal individual interest. In order to gain support for reforms, taxpayers must be convinced not just that they will lead to a collective benefit, but also to a personal benefit. By way of example, section five examines whether the flat tax, the latest proposal to simplify the tax system that has gained widespread support by claiming that it will lead to both a collective and a personal benefit, might successfully solve the problems identified in the previous sections and deliver the benefits claimed for it. This is followed by some conclusions.