Simplified Tax Code, Obama Edition
Between covering breaking news of the First Pup’s television debut and yukking it up on prime time with juvenile teabag jokes, media personalities have been absolutely swamped this month. Undoubtedly the talking heads would have found an angle that combined the two stories had Bo Obama not already been neutered.
But somehow amidst these concerns of grave national interest, and before swine flu began dominating the news cycle, little coverage was given to the implications of a significant tax day announcement. President Obama revealed that a rewritten federal tax code will soon “make it easier, quicker and less expensive for you to file a return, so that April 15th is not a date that is approached with dread every year.”
A simplified tax code is something most Americans can get behind. The federal tax code now stands at a whopping 70,000 pages. 85 percent of American adults say the federal tax code is complex, and 82 percent say the tax system needs to be completely overhauled.
So what can we expect from an Obama approved tax code revision? The first phase of the administration’s plan, conceived during the presidential campaign by economic adviser Austan Goolsbee, aims to eliminate tax returns for 17 million Americans.
Under the “Simple Return” plan, the Internal Revenue Service would complete tax returns for taxpayers whose sole income comes from one employer and whose interest income comes from one bank. The IRS would then send a copy of the return to the taxpayer. If the first wave of the program worked well, it could be expanded to other taxpayers.
The second and third waves of the Simple Return plan could bring the total to 52 million participating taxpayers.
The good news? Next year you may not have to file a federal tax return.
The bad news? The IRS will prepare your return for you.
Forgive me for plucking off a bit of low hanging fruit, but it’s hard to overlook that the IRS is overseen by Treasury Secretary Timothy Geithner, a man who failed to pay several several years worth of self-employment taxes until his finances went under the Senate microscope during confirmation hearings. His excuse was something along the lines of “TurboTax made me do it.” Who better to oversee the team of bureaucrats charged with calculating your tax bill?
But easy targets aside, this “simplification” is a political cop out. Many of the complexities in our federal tax code are there because some politician, special interest group, or narrow constituency has lobbied for their existence. Some serve legitimate government interests, but many don’t. President Obama, like those who preceded him, will not risk alienating powerful voting blocs by ordering a careful review of the tax breaks and incentives that contribute to the corpulence of the code.
Instead, he pretends that the solution to a bloated tax code is a bloated IRS. The IRS has been serving up spoiled broth, and Barack Obama wants to hire more cooks. That’s certainly a different way of doing things, but simpler? I don’t think so.
Proponents of the Simple Return plan boast that it could save taxpayers 225 million hours currently spent on tax compliance, and $2 billion in tax return preparation costs. But how many additional Internal Revenue Service agents will it take to complete returns on behalf of 52 million taxpayers? How many millions of taxpayer dollars will it take to implement this program?
And even if Austan Goolsbee’s plan wouldn’t cost taxpayers a dime, should the government encourage people to shift partial responsibility for their finances to the IRS? What federal interest does it serve when citizens relinquish personal responsibility to become more dependent on the government for tasks they can accomplish themselves? Shouldn’t we be wary when the federal government offers to permanently shoulder our burdens?
Keep in mind, the vast majority of the tax returns we’re talking about are simple 1040EZ forms. Even the IRS estimates a 1040EZ takes just a few hours to complete, but for anyone with a pulse and a modicum of aptitude with a calculator, the compliance time is more likely to be minutes, not hours. The cost for individual taxpayers filing the 1040EZ is virtually nil – perhaps the nuisance of spending an evening in – except when they choose to hire a tax preparer. Unless the filer is illiterate or disabled, tax preparation fees are completely optional.
Why should compliance costs that are voluntarily incurred by individuals become the collective responsibility of American taxpayers?
For the most conscientious among us, compliance costs will, of course, not change at all. Even if our tax returns are completed by IRS bureaucrats, we will spend the same amount of time and money checking calculations as we do now. Only the people willing to put absolute faith in IRS number crunchers will “benefit” from this new type of government dependence. I’m betting those are the same people who place absolute faith in President Obama.