Former Federal Reserve Gov. Lawrence Lindsey argues for a simplified tax system in his new book, "The Growth Experiment Revisited: Why Lower, Simpler Taxes Really Are America's Best Hope for Recovery."
He calls it the KISS plan – keep it simple stupid. "That's what I'm suggesting we have to move toward on the tax code," Lindsey told Newsmax TV in an exclusive interview.
"We now, even by IRS numbers, are spending something like $350 billion in order to comply with the income tax." That means for every $1 we owe in taxes, we're also paying 20 cents in compliance costs, Lindsey says.
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"Basically, if you could cut the compliance burden in half, which a Keep It Simple Stupid tax would do at a minimum, you've cut your tax bill by 10 percent."
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The way it works is that "when money comes into a company, it would be taxed," Lindsey said. If that money was then sent to another company, it wouldn't be taxed again.
"That's the only adjustment we made. But all money, I don't care whether you call it dividends or interest or capital gains or wages, it would be taxed at the business level," Lindsey said.
"For a household, for mom and pop, this is hard to believe. April 15th would become just another day, like May 4th or October 9th, whatever it may be."
Lindsey says he wanted to write his book to correct the argument that higher taxes are good for the economy. "Fortunately, most Americans don't [believe that,] but I wanted to take an in-depth look at that argument.," Lindsey said.
"We had a little bit of a tax increase in the '90s, and somehow that tax increase got associated with the boom of the '90s. One of the things I look at in the book is whether that was true, and it turned out that was a purely mythological argument."
The real catalyst for the 1990s boom was the Republican takeover of Congress in 1994, Lindsey says.
"For my entire life, up until that day, the one party [Democrats] had run the Congress, and we were having bigger and bigger spending, bigger and bigger government," Lindsey said.
"On that day we decided we were going to start paring back spending. The country did. We put in the Contract for America, we put in [Newt] Gingrich as speaker, and that caused the biggest bond rally in U.S. history."
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