Many things in American life are puzzling and often beyond comprehension.
To name a few: the NFL’s overtime rules, why Kim Kardashian is a household name, how a mediocre politician like Kamala Harris got to be a heartbeat away from the most powerful job in the world.
But few things are as confusing as the U.S. tax code, which, as Reason magazine columnist Eric Boehm recently pointed out, drains a significant amount of time and money.
Quoting research by a group called the American Action Forum, Boehm recently noted that this tax season Americans spent an estimated 6.5 billion hours filing their taxes.
Atop that, they also spent more than $200 billion trying to comply with this mandate.
“That’s an insane amount of added expense — in terms of time and money — being put toward no productive ends whatsoever,” Boehm noted.
He pointed out that the aggregate time Americans took to complete and file their income tax paperwork actually dropped in recent years.
The main reason was because of former President Donald Trump’s 2017 tax reforms, which besides lowering rates also expanded the standard deduction for all filers.
Still, Boehm noted, “the overall cost of compliance has kept on growing.”
“Some of that complexity is the natural result of a tax system that attempts to do a lot more than simply collect the revenue necessary to run the federal government,” Boehm explained.
“The tax code attempts to balance fairness, enforceability, efficiency, and other goals that are often in conflict with one another.”
Such a harebrained effort, Boehm wrote, produces a complicated and complex system that at its core “flows from the federal government’s effort to tax income many times.”
Grover Norquist, president of Americans for Tax Reform, a fiscally conservative nonprofit that advocates for lower taxes and flatter rates, told Boehm that Americans’ incomes are taxed “once when you earn it, again if you invest and receive interest or capital gains, again if you invested in a company that is subject to the corporate income tax, again if you are imprudent enough to die.”
“If they taxed your income one time — when you received it as income — it would be simpler and be less damaging to your privacy,” Norquist added.
But Democrats would obviously find no joy in that.
For instance, he noted that left-wing Democratic Sen. Elizabeth Warren of Massachusetts wants the federal government to create a TurboTax-style software to compete with TurboTax and other tax-assistance providers who often lobby the government to maintain a complicated, confusing system, since it benefits their business.
“As opposed to, you know, addressing the actual problem: the complexity of the tax code,” Boehm wrote. “Relying on the IRS for more aspects of the tax-filing process seems like a recipe for more pain and frustration.”
Boehm pointed out that in 1998, a federal law was passed that required the IRS to submit ideas on how to make the tax system more transparent and user-friendly.
Yet the agency has not filed that report in 20 years.
Meanwhile, in addition to maintaining our byzantine system, President Joe Biden is proposing giving the IRS another $2.2 billion so it can hire more agents to hunt down alleged tax scofflaws – even as the current system hauls in a record amount of tax revenue, both in total and from individuals.
“The obvious solution to these problems is not giving the IRS more funding or directing it to create a sure-to-be-dysfunctional tax-filing program to compete with the private sector,” Boehm concluded.
“Lawmakers should try to simplify the tax code so every American can pay what is owed without waiting for an IRS agent to finally answer the phone or shelling out $60 to TurboTax for help.”
“The federal income tax, if it is to exist at all, should be simply a tool for funding the federal government — not used as a mechanism for social engineering,” he added. “Tax Day is never going to be something worth celebrating. But it would be nice to spend fewer hours trying to figure out what you owe the IRS — or what the IRS owes you.”
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