Happy Tax Day! If it doesn’t feel like a holiday, consider this – you are obliged to count up all your blessings from the previous year and spend time doing something you don’t entirely understand or enjoy all that much. If you’ve really procrastinated, like me, you may have to take off work. But if you haven’t filed yet, here is your last minute advice from Barataria: stop screwing around on the internet and file already!
This is an even more special day than your typical holiday because Tax Day means one thing to Americans everywhere – we all get to complain. Bitterly and constantly. Rather than whine about the amount of taxes, however, it seems more appropriate to take note of the incredibly complicated and expensive way we go about collecting the money that is necessary to run a government. It costs between $160 and $234 billion just to prepare the paperwork, or about as much as the feds collect in corporate taxes.
As Congress contemplates actually doing its job and passing a budget for the first time in seven years, calls are going up to do more than simply balance the budget. The complications in the system are driving everyone nuts. An excellent editorial in the Milwaukee Journal-Sentinal called on Ways &Means Chair (and local boy) Paul Ryan (R-WI) to include reforms akin to those proposed by his predecessor Dave Camp (R-MI).
The problem is best illustrated by the sheer cost of filling out the forms and figuring out what all the line items mean. The National Taxpayer’s Union is certainly a right-wing organization, but come tax season they have a point. Their annual cost of compliance estimate came in this year at $234B for all forms of taxes, individual and corporate.
That’s about $2,000 for every household in the US.
Their report backs up this claim with a lot of data on the time it takes, the number of phone calls the IRS receives, and wait times. It’s a blistering report that you don’t have to take as completely true to get the point – there has to be a better way. Even if you believe the more often cited lower figure from a hard to identify source, $160B, it’s far more than it should be.
How can we make it simpler?
There are many ways, of course, and frankly that’s not important right away. There needs to be a broad agreement on the form and character of meaningful reform as well as a target. Let’s just say that it really is $234B overall. If we reduced that by 2/3 to about $78B, we could have an accompanying tax increase of $78B and save the taxpayers a net $78B overall. Sound like a fair deal?
This would mean a radical overhaul, to be sure, and it’s not going to be easy. But the potential increase in revenue for a government running a deficit of $510B a year is very important. General reform all around fits in very well with a drive to a balance budget, especially if we make the big change Barataria has called for and start treating ordinary expense and capital differently.
Of course, this is all a lot of work and it sounds especially impossibe for a divided and dysfunctional government. But on Tax Day, I think we can come together and agree no matter where we come from that we could carve a better tax code out of a banana. Let that be what brings us all together and makes Tax Day a joyous holiday we can all celebrate!
OK, that’s probably way over the top. But can we at least agree when something is this obvious – and get the elected leadership to work on it?
Reblogged this on rennydiokno.com.
Thank you for reblogging!
Excellent point about reducing the costs of the paperwork and increasing the amount of money available to run the government. I find that paperwork of all sorts is costing the government an excessive amount of money. They are struggling to digitize their forms and documents so they continue to pay exorbitant amounts for printing, storage, filing, organizing (I mean they pay people to move paper), and archiving. Not to mention, as you went into, the ever increasing complexity of deciphering line items is costing additional resources.
It is completely wasted. There is a general rule that simplicity works against fairness, but there is also a point where complexity works against fairness – and certainly against perceived fairness. Everyone believes that those who can afford to hire good accountants are getting a big break, and that does seem to be true. That’s a huge problem.
There is no excuse for the level of complexity we have. It works against everyone’s values and expectations for an efficient and fair system.
The whole system could be done on a postcard or better yet one email. They should tell you what your bill is and send it to you rather than make us have to do it.
I don’t know if the IRS could ever send us a bill, but it could be done on a much simpler online form, yes.
Our taxes are so much lower than any other industrialized nation there is no place to complain. Simplification would be good but that always goes against fairness. A flat tax would be a lot simpler but it would be regressive.
I believe that a flat tax with a high deduction based on 200% of the poverty line, ie the basic cost of living in the US, would be at least as progressive as we have now. So I don’t think we can argue that fairness or prgressivity is the main goal of the system we have now.
If you have anything complicated on your taxes, DO NOT WAIT UNTIL THE LAST MINUTE! Many times you have options regarding what you claim this year or next and those should be evaluated carefully. The biggest single mistake I see comes from people who rush through everything on their own without reading anything about what they are doing.
Advice from the accountant! 🙂 I hope no one waited until the last minute. Wait, nearly everyone does. Nevermind. 🙂
Yes, let us lament together:
” If we reduced that by 2/3 to about $78B, we could have an accompanying tax increase of $78B…”
I know, you don’t want to pay any more than you do. But we do have a deficit, and as long as we do we can’t ignore it.
I’ve been doing just that – procrastinating!
See? Everyone does. 🙂 Hope it worked out!
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