Why Overhauling our Tax System would be a Disaster

Recently, there have been a lot of politicians suggesting the idea of overhauling our tax system. The main idea that the candidates are suggesting is to completely do away with the Internal Revenue Service (IRS) and replace the very complex tax system we have now with a simpler flat tax system. While on the surface it seems like a good idea, I'll give you some reasons why this overhaul would be a disaster.

The idea of doing away with the IRS would probably make the average tax payer giddy with excitement. No more complicated forms. No more worrying about whether income is taxable or not. No more dread of April 15th. I can hear the heavenly choruses singing as I type this. However before we drop the axe on them, let us consider the consequences from a employment point of view. The IRS has somewhere in the neighborhood of 87,000 employees. I would venture to say that the complexity of the tax system creates most of the need for so many employees. Overhauling the system would probably cut out the need for about 90% of those employees. Beyond the IRS, there is the tax preparation industry to consider as well. The entire industry would be sunk. This change would also affect accountants as well. There are quite a few accountants that would be out of work because of this massive change. Is an easier tax system really worth the loss of so many jobs?

I'll readily admit, that being in the tax preparation industry myself. That the arguement above is entirely self-serving.

But my next point is not. One of the beauties of having a complex system is that Congress has a lot of flexibility in determining how to get more money for wars, roads, social programs etc. For example, to pay for a universal health care program, Congress could choose to raise taxes for people who make over 500K a year with a very small amount of tweaking to the tax laws. But if every American were paying some flat percentage of the income in taxes, the only way to get more money would be to raise taxes across the board. Now to pay for a universal health care system, Congress would have to raise the taxes of the very people who need the extra health care coverage!

My final reason for not overhauling the system is refunds. Each year when that refund check (or direct deposit) goes into your bank account, you get a new opportunity to pay off debt, buy necessity items, put money away for retirement, or just party like rock stars. With an overhauled system, those refund checks would either greatly decrease, or disappear all together. The reason for that is because most people get refund checks because they have a lot of credits and exemptions that counteract the money they've paid in over the year. But with a simpler system, there wouldn't be any more credits or exemptions and thus no more big refund checks.
I think the job loss, the loss in flexibility, and the lost of the yearly pot of gold make the price of having a simpler tax system too high to pay.