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TheOtherDave comments on Free to Optimize - Less Wrong
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I mean, think about it; what's the best possible tax code? It takes about a page:
A list of tax-brackets, linked to the GDP deflator, and their (progressive) rates; e.g. "Under $5k: no tax; $5k-$1k: 10%; $10k-$20k: 15%; $20k-$40k: 20%; $40k-$80k: 25%; $80k-$160k: 30%; $160k-$320k: 35%; over $320k: 40%"
A list of important deductions, such as charitable donation and capital loss
And... that's about it frankly. This would raise revenue in a simple and fair way, and effectively eliminate the tax-filing and tax-compliance industry. And we could do it tomorrow by an act of Congress. But we won't.
I'd be interested in an example of what you think the specification of a deduction looks like.
I guess it might take a few more pages to precisely describe what constitutes a "charitable organization" or something... it wouldn't take our whole tax code, that's for sure.
Part of the problem is that we have so many stupid deductions. You get to deduct mortgage interest, and children you have, and student loans... we're shifting incentives all over the place without any awareness of what we're doing.
You underestimate the intentionality of the deduction scheme. The things which are incentivized by the tax code are purposeful. They have knock-on effects that aren't anticipated, but that's true of every policy.
Also, you significantly underestimate how difficult it is to specify all the important aspects of the tax code rigorously enough to be enforceable.