The Wealth of Nations is on my reading list. However, I keep putting it off because of the length (750 pages) and the eighteenth century writing style which I assume it uses (and which I deplore). However, since User-9987941778688719640 was kind enough to use a very useful quote from that book in his answer, I'm just going to steal it.Good taxes meet four major criteria. They are :Proportionate to incomes or abilities to payCertain rather than arbitraryPayable at times and in ways convenient to the taxpayers andCheap to administer and collectSo let's look at the current tax system in the United States in reference to these points. (1) Good taxes should be proportionate to incomes or abilities to pay. The quintiles in America, from lowest to highest, pay taxes as illustrated in the following image:As the above graphic shows, the lowest quintile paid the lowest percentage of taxes (1.5%) while the highest quintile of earners paid the highest percentage (24%). The average American household paid 18.1%. So we've met criteria #1.(2) A good tax is certain rather than arbitrary. In this case, it depends on what level of certainty you're looking for. We are certain of the actual tax rates since they are well known and don't get changed often. However, we're almost never certain exactly how much we'll actually pay until we fill out our tax returns. If we were actually certain, nobody would ever get a refund or have to pay more at tax time. The exact amount would have already been deducted from your paycheck and nobody would ever have to pay fines because they didn't pay enough during the year. Considering the consequences involved with this uncertainty, we certainly can't say criteria#2 has completely been met.(3) A good tax is payable at times and in ways convenient to the taxpayer. You can definitely say one good thing about payroll tax deduction. It's terribly convenient. So much so that when you ask people how much they paid in taxes, a common response is “Oh, I didn't pay. I got a refund.” Um, yeah, but how much did you actually end up paying? *Blank stare*Now we all know when April 15 is. That's convenient. And they give you a long time between the time your employer must have your tax documents to you (February 1) and tax day. That's convenient too. I hate to say it but I think the government nailed it on criteria #3. But if I missed something, please let me know.(4) A good tax is cheap to administer and collect. And we did so well on our last one. This one is a total failure. The costs to all parties are huge. Government costs, business costs, and personal costs. Lots of people are very uncomfortable doing their own taxes so they pay organizations like H&R Block to do it for them. Still more people give it a try but use products like TurboTax to help ensure they make no mistakes. And this is personal taxes, the theoretically easy stuff.Business taxes are insanely complex. This requires businesses to hire tax accountants and tax lawyers so they avoid the major pitfalls. Even so, they still often run afoul of various rules they either didn't take into account or interpreted differently from the government official who is now auditing them.In criteria #4, our government has completely failed us. As you can see from the above image, this didn't used to be true but now it gets worse ever single year.So the American income tax system is not a good system. What are some good systems? Let's look at a few.A flat income tax could improve things. Let's say our flat income tax works as follows:Your family is not taxed for everything earned below the poverty level. The flat rate only applies to everything earned above the poverty level. Proportional. Check.Your employer doesn't start taking taxes out of your check until you reach the point where you actually owe taxes. At that point, the exact amount you owe is taken out of your check. Optionally, you can have your employer pull money out of your paycheck throughout the year to help even things out. However, nothing is sent to the government until you actually owe it. Certainty. Check.This is payed through payroll deduction, just like our old system. Convenient. Check.The tax form for the year is tiny, just a few blocks, more of a confirmation than an actual report of what you've earned. In fact, if you have only one employer, the form they send you at tax time could simply be signed and forwarded to the IRS. Nothing to fill out at all. No more to pay. No refunds. And no pain. Cost effective. Check.Not bad. The problem is will it stay that way. After all, the tax code chart shows that there were extremely few rules for almost three decades then our government went nuts. What's to stop them from doing the same thing again here?Since consumption taxes all work very similarly, I'll discuss the following three tax systems at the same time: sales tax, the FAIRtax, and a VAT tax. I'll make distinctions when needed.Sales taxes and VAT taxes are not proportional. The FAIRtax is essentially a sales tax where all taxes charged for everything below the poverty level is refunded. Regular sales taxes and VAT taxes could use a similar system. Proportionality is either included or obtainable. Check.The tax is standardized. There is no confusion concerning how much is paid and when it gets paid. Certainty. Check.Tax collection is performed by businesses at the final point of sale. For the VAT, tax collection occurs at each point in the production chain and at the final point of sale. Convenient. Check.For sales tax and the FAIRtax, businesses make a computation once at the point of sale. Then they fill out forms similar to the ones they're already used to filling out for sales taxes and submit these taxes on a regular basis (generally monthly). For the VAT tax, each point in the production chain must compute the tax for each piece produced minus the VAT already paid for that piece. These taxes would be submitted on a regular basis (generally quarterly). Sales tax and the FAIRtax are extremely cost effective. The VAT tax has many more steps than the other two but much less than our current system making it cost effective as well, just not as much as the other two. Check.So the four systems I've mentioned all comply with Adam Smith's requirements for a good tax much better than our current income tax system. Whether or not they're ideal is fairly subjective but I'd take any of them over what we have now. The problem isn't how good other tax systems are, the problem is all of these systems take away our political leaders' ability to use the tax code to manipulate us. And that's something they just don't want to give up.