To celebrate April 15, TPC director Len Burman argued yesterday on TaxVox that today’s income tax “is not all bad” and that “we could do a lot worse.” Well, it may not be all bad, but it is pretty awful. And while we could do worse, we could also do a lot better.

The income tax has lost its way. It no longer raises nearly enough money to pay for the government we seem to crave. This year, Washington will spend about $3 trillion. But we are going to collect only about $1.2 trillion from the individual income tax. Most of the rest will come from payroll taxes.

Speaking of payroll taxes, they are how many American contribute to their government these days. On average, the lowest 40% of earners—those making less than $28,000-a-year—pay no income tax at all—in fact many receive cash payments through the income tax (which these days, doubles as an income security system). Middle income earners pay an average effective tax rate of just 2.8%. Is a tax code that effectively exempts half the country the kind of broad-based revenue system we want?

Then, there is the matter of transparency, a subject much on my mind as I was frantically filling out my return this week. Truth is, few of us have any idea why we pay what we pay, and the Code is filled with backdoor ways to collect revenue, such as the Alternative Minimum Tax and the mysterious phase-outs of itemized deductions and personal exemptions. By 2010, the AMT alone will quietly take back more than one-quarter of the Bush tax cuts of 2001 and 2003.

One last complaint (at least for today). Collecting money has become a secondary goal for the income tax. These days it is too often a tool for the government to manipulate social and economy policy. Want people to get their health insurance through their job? Give them a tax break. Want farmers to grow corn for ethanol? Give them a tax break. Want to encourage more people to buy houses—even if they can’t afford them? You got it.

Burman defends the income tax by criticizing some of the worst alternatives, such as the national retail sales tax which was embraced by Mike Huckabee and Fred Thompson’s curious plan to allow people to figure out their taxes two ways and pay whichever is less (an idea that John McCain is toying with as well). To say that the income tax is better than these silly ideas is damning with awfully faint praise.

The income tax is not all bad, however. If the Code were simple, transparent, and fair, I’d probably be out of a job. So, for that alone, it gets one cheer.

We’d love to hear from you. Post a comment and let us know who you think is right. Is the income tax the best of a world of bad choices, or is there a better way? And have a Happy Tax Day.