Posted by
Mike Bates on Saturday, April 11, 2009 9:09:59 PM
If, as Oliver Wendell Holmes claimed, taxes are what we pay
for a civilized society, we have become very civilized indeed.
A difficulty is that our tax laws are so complicated, so
convoluted, so loaded with preferences and exceptions, that it’s next to
impossible to understand them, let alone apply them fairly.
President Barack Obama must be acutely aware of this problem
by now. Tom Daschle, his first nominee
to run Health and Human Services, withdrew after disclosure he hadn't paid
$146,000 in back taxes. The same day,
chief performance officer designee Nancy Killefer withdrew her name from
consideration because of tax issues.
In his role as Treasury secretary, Timothy Geithner runs the
Internal Revenue Service. This is ironic
as it was disclosed during his confirmation hearings that Geithner himself failed
to pay almost $40,000 in taxes since 2001. Moreover, he took a dependent-care credit on his returns even after an
accountant advised Geithner he didn’t qualify. Obama asserted Geithner’s errors were “an honest mistake.”
During the confirmation process for Health and Services
secretary, Kathleen Sebelius paid the IRS more than $7,800 for “unintentional
errors” of previous tax returns. Obama’s
nominee for U.S.
trade representative, Ron Kirk, was sworn in last month after paying $9,975 for
amended tax returns. Labor secretary
designee Hilda Soltis’s husband settled over $6,000 in tax liens in February.
If people who qualify for appointment at the highest levels
of government can’t accurately complete their taxes even with extensive
professional assistance, what chance does an average Joe or Jane have of
navigating a tax code that’s out of control?
In 1913, the Form 1040 was four pages long. And that included instructions. This year’s Form 1040 with instructions and
selected schedules checks in at 161 pages.
In January, National Taxpayer Advocate Nina Olson made her
annual report to Congress. She noted
that one estimate of the number of words in the current tax code is 3.7 million
and that there were more than 500 code changes in just 2008. About six in ten taxpayers hire a preparer to
complete their return.
Calling the IRS for help is often an exercise in
futility. One analysis
found staff gave correct answers to only 57 percent of the
questions asked by investigators pretending to be taxpayers.
So flawed is the tax system that practically anything,
including a consumption tax or a flat tax, would be preferable. Ending withholding would be beneficial. It conceals the real cost of government by
taking the money before the taxpayer ever sees it. Paying in an annual lump sum would drive home
what the genuine cost of government is.
Another recommended change would involve moving tax day from
April 15th to October 31st. This would make Halloween even scarier. It also would place it only days before
voters have a say on the miscreants who’ve so grotesquely expanded the scope
and expense of government.
We need to change our tax system and make it simple and
equitable. So simple and equitable that
even Barack Obama’s appointees would have no excuse for not paying their fair
share.