It’s time for that annual ritual that taxes my soul (to paraphrase Thomas Paine) as much as any other in modern American civic life. April 15 beckons, and if you have not already started, you are starting behind.
At our house, there is one weekend when the family knows to leave Daddy alone. Even the dog knows not to come upstairs to the study. Tax preparation weekend.
My grouchiness reaches a peak about when I get halfway through our check registers, scouring for any deductible expense that did not show up in the folders of paperwork that I socked away over the last year.
My accountant sends a helpful “tax planner” every year to guide us through tax preparation. There is no clearer tracking mechanism of the decline of American civilization. The planner gets longer and more preposterous each year, because our federal tax code does the same. The planner asks all sorts of questions aimed at teasing out taxable “events”:
“Did you install solar panels on a fuel efficient vehicle used on a farm?”
“Did you withdraw money from your IRA in order to pay education expenses, buy an energy efficient home, or defray costs incurred because of a federally-declared disaster that impacted Greene County in July?”
“Did anyone in your family employ a childcare provider while looking for work to generate additional income to pay for tax preparation?”
And so on. Somewhere, someplace, some special interest group is happy. But for millions of Americans, those cumbersome, social policy-driven deductions just increased time spent dealing with taxes and decreased time with their families.
Our tax system is so obviously broken, and so needlessly complex, that it takes hours of time, and hundreds of dollars paid to an accountant, for the Wilsons just to file a relatively simple return. Sitting in my study knee deep in paperwork, I imagine what I could be doing with that time. And with that extra money.
Misery loves company. According to the IRS’s National Taxpayer Advocate (whom taxpayers pay to tell us how burdensome the tax system is), Americans spend more than six billion hours a year complying with the tax code. That is equal to three million workers employed full time for a year. Sixty percent of taxpayers now pay someone to prepare their returns, costing in excess of $30 billion a year. Almost 30 percent buy software. That’s before we pay a cent for actual taxes owed.
Some of those hours are no doubt spent trying to get someone on the phone to help. Don’t hold your breath. In 2012, a third of the 100 million people who called the IRS never reached a living person.
Increasingly, the tax code, like so much else mandated by Washington, is wholly inconsistent with a free society.
If we had a simpler tax code, never mind lower rates, it would free literally billions of dollars and hours spent every year on compliance to be used productively. If Washington wanted to set the stage for economic growth, it could start by chunking the tax code and replacing it with something simpler and more transparent.
Instead, we get “green” credits and gimmicks galore. Washington thrives off complexity because it concentrates power in Congress and the bureaucracies of the federal government. The tax code is four million incomprehensible words because it has become a prime vehicle for corporate welfare, redistribution, social policy, and all sorts of manipulation.
Here’s a thought: how about a tax system aimed at simply collecting revenue needed to fund the government?
Hopelessly naïve, I know. Maybe it’s the high I’m on from the paper dust inhaled while going through my deductible receipts.
Enforcement becomes an ever-greater nightmare the more complex the tax code becomes, too. Just ask the administration.
Several recent articles have noted an IRS report that 40 of President Obama’s White House aides currently owe a total of $333,485 in unpaid back taxes. Last year, 36 White House aides owed $833,000. The year before, 41 Obama staffers owed $830,000.
While you are “paying your fair share,” don’t expect Obama’s staffers to do the same. Same for many federal workers and retirees, who owe collectively $3.5 billion in back taxes. That’s a lot of White House tours.
Obamacare’s new taxes will only make your federal taxes more complex (and, higher). The individual mandate for insurance will be administered by the IRS, too. All that kicks in for next year’s filings, assuming the feds can figure out how to implement the changes.
The anticipation of 2013’s “tax planner” is killing me already.
Moss Point native Cory T. Wilson is a Madison attorney who pays his taxes, every year, on time. Follow Cory on Twitter, @CoryWilsonMS, or email firstname.lastname@example.org.