If Citigroup Chief Economist Willem Buiter (and former Financial Times blogger) looks like he’s suffering through a nervous breakdown, you can blame the U.S. Tax Code. Buiter dropped the news that he nearly had a nervous breakdown simply getting his information together in order to do his taxes on a recent appearance on Bloomberg Radio.
Buiter stopped by Bloomberg Radio last week to talk, ostensibly, about the current global economic climate (downloads as an mp3). At the beginning of the interview, Buiter focused on Europe, dropping such nuggets as “[t]he Greeks are by no means on a sustainable path” and “Spain is the key country about which I am most worried. It has clearly moved to the wrong side.”
But later, the interview moved to government control and its effect on investment and growth. Buiter noted that “[r]egulation, right, laws, can do as much good or damage as spending and taxes.” He was then asked, whether we (meaning the U.S.) were doing it right. Buiter answered with an emphatic “Oh no.”
After complaining about nearly being driven to a nervous breakdown, he noted, “The US tax system is completely incomprehensible! My wife and I are PhD’s in economics, both of us, and we can’t make head or tail of it so there’s something very wrong there.”
Buiter, whose Ph.D. comes from Yale, isn’t alone in complaining about the complexity of the Tax Code. Around this time of year, many taxpayers complain that it’s too difficult and time consuming to figure out their federal income taxes.
The IRS estimates that the average taxpayer will spend 22 hours on a federal form 1040 (taken from the federal form 1040 instructions, downloads as a pdf), including 10 hours just on record keeping. There’s a lot to sort out if you have more than wages on a form W-2. Of course, while I have some sympathy for Mr. Buiter, I do have a hard time imagining him hunched over his PC entering receipts into Quickbooks. I’m guessing he has people who do these things for him. We should all be so lucky.
Still, he makes a valid point.
Summing up, he had this to say:
So, there is so much wrong with the US fiscal system that a week wouldn’t be enough time to list it.
