Frank Siler writes:
All members of Congress should be forced to do their taxes with pencil, paper, and IRS instructions. I am hopeful they would all conclude that the process is ridiculously complicated, invasive, and needs to be greatly simplified. Often I see politicians making clearly false or at least misleading statements about changes they would like to make in the tax code; if the system was simpler more people in our society could have intelligent conversations about how our tax system works.
Secondly, but related to the first point: transaction costs and ease of compliance need to be considered as part of tax legislation. There are so many technicalities in the code that it is very difficult to produce a 100% correct tax return; hence it is difficult to tell the difference between an honest taxpayer and one who deliberately cheated. Additionally, the number of technicalities makes it very expensive to be compliant with the code.
Finally, it would also be helpful to compare the United States tax compliance burden to other countries: having lived in the United Kingdom, I can say that their process appears much simpler and less invasive to a typical citizen.
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{ 4 comments… read them below or add one }
You are so correct. Alas I fear that you wish is not on anyone’s list in government that could possibly make it happen. If the health care debate is as hot and heavy as it is, just think what tax simplification could generate.
The problem is Congress uses the tax code for social engineering. To simplify things would require them to give up some of their power to influence Americans.
I do think Congress should be forced to read the code every year and take a test on it though. If they are going to pass laws they should be forced to read, understand and test on them.
That would slow down the passage of laws wouldn’t it?
It would be wonderful if the tax code were simplified — especially that pertaining to individuals. During tax season (January-April) my sister works for one of the tax-preparing outfits. She admits that their fees, and what they actually do, is a real ripoff. These outfits exist simnply because preparing one’s tax return seems so daunting for most people. I think it’s disgusting that so many people, in addition to paying income tax, also have to pay someone else to figure it out for them.
I have always prepared my own tax returns. (I should be able to — I teach some of the more esoteric aspects of the tax laws in my advanced reak estate courses.) I’ve been audited four times. Once the IRS owed me a small amount, once I owed them a small amount and the other two were washed — no additional tax liability.
HOWEVER, simplification is a pipe dream. Congress tried it in 1986 (Remember? Only two tax brackets, no preferential treatment for capital gains, and, supposedly, a lot of loopholes closed. At least, that’s what they told us.) By the time the special interests did their bit and other Xmas-tree crap got larded on, the new “simplified” tax code was 50% more pages than the “complicated” one it replaced.
No matter how much lipstick you slather on the pig, our political system, what with campaign expenses and contributions, is founded on a base of bribery and corruption. You and I can’t afford to make significant bribes, but the big boys sure can, and the results always benefit them.
I agree with everything said. Fundamentally, the issues with tax problems are issues with the way Congress does business. I don’t think it’s realistic to expect that Congress is going to do away with a system that favors special interests, but I do think that with a bit of political prowess it might be possible to get some Congressmen to do their own taxes. Even if this happened at the state level, it might get some discussion going.