By Christina Sun

You know there is a problem with the tax system when the U.S. Secretary of the Treasury fails to file his taxes correctly.

Whether or not Timothy Geithner knowingly evaded his taxes, the discrepancy shows how complex our current tax system really is.

If you’ve ever filed taxes, images of inscrutable tax policies and forms are probably ingrained in your recent memory – studies agree.  A Tax Foundation survey in April 2007 found that 83 percent of people surveyed said the federal income tax is “very complex” or somewhat “complex.” The Brookings Institution reports that a recent study estimated that taxpayers spent 3.2 billion hours and $18.8 billion preparing and paying taxes in 2000. On average, each taxpayer spent an average of 25.5 hours and $149.

The tax system is difficult to navigate because over the years, Congress has made rules and exceptions to incentivize taxpayers to use their money in certain ways. However, taxpayers often cannot easily take advantage of incentives, because they are hidden amid the mounds of instructions.

In addition to being complex, the current tax system discourages savings, according to a testimony to the President’s Advisory Board on Tax Reform. The government taxes hard-earned income each step of the way. With payroll taxes and income taxes, state taxes, local taxes, property taxes, sales tax – even taxes on money made from investments, the government seems to have developed a never-ending stream of innovative methods that serve the sole purpose of taking money from the Americans that earn it.

To fix this system that fails to reward the middle class for working hard and being economically productive, the tax system needs to be completely overhauled. We need a simpler, flatter tax.  It seems that most Americans would agree, as

78 percent of people surveyed by the Tax Foundation believed the federal tax system  needed “major changes” or “a complete overhaul.”

One alternative tax proposal is the “FairTax.” The FairTax would eliminate all federal income and payroll-based taxes and institute a flat 23 percent national sales tax in its place. The tax is levied at the point of purchase on all goods and services for personal consumption.

According to the Americans for Fair Tax, the FairTax is more progressive than the individual income tax, payroll tax, and the corporate income tax. Only those with the ability to pay actually pay. It eliminates both the payroll tax and hidden tax costs passed along to consumers in the price of goods and services.

By proposing federal government issue monthly “prebates” that would ensure no American pays federal taxes on spending up to the poverty level, this tax method would continue to protect lower-income families. For example, under the U.S. Department of Health and Human Services poverty guidelines for 2005, a family of four could consume $25,660 worth of new goods tax-free (under this system, used products would not be taxed at all). Above the poverty line, taxes increase according to how much a family consumes. The tax, unlike the current tax system, gives workers their full paycheck so they have the choice to spend, save, or invest.

One primary point of concern is the viability of such a flat tax, even though this model has already improved financial stability in a number of European countries. In a February 2010 article, the Financial Times compared 27 European countries’ gross government debt to their gross domestic product in 2010. The overall European Union nation has a gross government debt that represents 79.3 percent of their gross domestic product. European nations with flat tax systems tend to have more financially efficient government systems: six of the eight lowest indebted countries have a flat tax system, with an average gross public debt of 29.2 percent.

Tax policy is complicated and controversial, and ideas for tax reform are often met with cautious silence from political leaders and misrepresentation from media outlets.  According to research by the Business and Media Institute, the media has largely ignored the FairTax and has mischaracterized many of its measures when the FairTax has been covered. It is time that the American people set the facts straight and advocate for a better system.

So when the dreaded April 15 rolls around again, just remember that the Secretary of the Treasury could not even get his taxes right. Hopefully that will offer some consolation. When it doesn’t, consider supporting a better method of taxing.