Last night I did my taxes. I looked like a fool sifting through the various forms for my handful of investments and having Turbo Tax ask me roughly 40 questions about whether or not I received income from agricultural pursuits. What? According to Turbo Tax, I owed the federal government $67, but the state of New York owed me $138, so after I paid the Turbo Tax fees, I pretty much broke even. So for a net transfer of roughly zero dollars, I spent a few agonizing hours wondering why the whole process needed to be so downright awful. Furthermore, I'm at a complete loss to determine how Turbo Tax figured I owed or was owed strange sums like $67 and $138 respectively. Perhaps, as in the past, I will receive a check from the IRS telling me I overpaid. Maybe the guys down at the IRS don't know any better than the guys at Turbo Tax. Maybe this whole process is byzantine and ridiculous. Corporations have to employee armies of lawyers to figure out how to pay - or rather, not pay - their taxes. We're not just feeding onerous levels of federal bureaucracies, we've created an entire sector of private business around supporting that bureaucracy.
And for what? Not to make my life easier, that's for sure. I have no idea whether I'm paying "my fair share" or not. Certainly all the loopholes and layers of regulation don't exist so that GE can find a way to pay no taxes, right? Perhaps the tax code is so esoteric because we want to encourage wealthy people to stash their money elsewhere. Regardless of the reason, the current state of the American tax code is just silly, and that's coming from someone who doesn't understand it. I wonder what the people who actually know what is going on think the whole process. I wonder if there is anyone who knows what is going on...I'll say it, I'm skeptical such a person exists.
I'll be the first to admit I can't name most of the specifics that would be needed to simplify the tax code, but certainly simplification is the key word. If it takes someone with my annual salary and meager investments three hours to determine - somehow - that I owe an extra $67, surely the process can be streamlined. And no, I didn't have any income from my rental properties in 2012.
When Rick Perry wanted to be rid of all of the federal agencies he couldn't remember, this is probably the kind of thing he had in mind - if, in fact, he had anything in mind. But again, the mysteries within the tax code have spawned entire private industries as well. There is no such as a tax lawyer if there is a simple tax code. Or at least there are fewer of them. Is this why people pay $150,000 for law school, so they can become tax lawyers? This is not an effective use of anyone's money, especially not that extra $67 I owe.
I've been ranting, but not without reason. For all the useless discourse about taxing and spending coming out of our nation's capitol, reforming and streamlining the tax code would be smart way to start addressing both. I don't know if it would be easy, I can't imagine anything about the tax code is easy, but we could certainly raise revenue by getting rid of really silly thing like corn subsidies. We could also probably trim federal payroll a tiny bit by slimming down the IRS and possibly other regulatory agencies as well.
Put simply, our tax code is archaic and complex and dominated by special interest loopholes that serve no purpose except to the small handfuls of people influential and wealthy enough to lobby for them, in other words, the people who don't need them. I owed $67 more; GE paid nothing. Hold up. As long as we go along lumbering through tax loopholes, we will deny ourselves revenue and encourage irresponsible fiscal behavior. A simpler tax code could help curtail spending by streamlining the process for tax collection and giving the government a clear picture of what annual revenue intake would be. We could also make the tax code more progressive by eliminating loopholes, and probably lower overall tax rates and still raise revenue as suggested by Paul Ryan and Mitt Romney - who, of course, neglected to specify which loopholes they would close.
There are dozens, maybe hundreds of reasons to do this, each loophole representing one good reason to reform the tax code. The complexity of the system is unsustainable and purposeless. Let's find a way to make next April easier on everyone.
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