Stephen Moore, director of fiscal policy studies at the Cato Institute, is proposing that taxpayers be allowed to choose between the current income tax and an alternative maximum tax of a flat 25 percent of gross income. He calls the plan a "Maxtax."

Moore believes some Americans would want to retain the right to deductions for mortgage interest, charitable contributions and other items. Furthermore, he acknowledges that adopting a flat tax for all taxpayers with no deductions may be a political impossibility at present. The Maxtax offers a middle ground for those who wish to avoid the complications of present-day IRS requirements but still simplify their tax filing.

Here's how the alternative tax would work:

• Taxpayers would be permitted only one deduction -- a credit for payroll taxes paid, which amounts to 7.65 percent for a salaried worker and 15.3 percent for a self-employed worker.

• Corporations would pay the 25 percent maximum tax on their gross income with a credit for any payroll tax paid.

• Those still willing to brave the 5.5 million word, 9,000 page Internal Revenue Code would be perfectly free to continue to file the same lengthy tax forms they do now.

• Or, they could opt for using this amendment which Congress would tack onto the end of the tax code: "Any individual or business has the option of bypassing all the preceding requirements, regulations and instructions and instead paying a tax of 25 percent of gross income earned during the year, minus a tax credit for any payroll tax paid."

Moore supposes that millions of Americans would opt for the infinitely simple Maxtax -- even if its lack of deductions meant that families might pay a few dollars more to Uncle Sam.

• Americans now spend an estimated 5.5 billion hours a year complying with the tax code.

• Compliance costs drain $157 billion a year from the U. S. economy, according to Tax Foundation estimates.

• If the Maxtax cut compliance costs by at least two-thirds, it would save the nation at least $100 billion a year.

Source: Stephen Moore (Cato Institute), "The Alternative Maximum Tax," Wall Street Journal, January 14, 1997.