Taxes

Posted on April 17, 2006

Since tonight is the deadline for filing Federal income taxes in most of the country, I thought now would be as good a time as any to beat one of my favorite dead horses:

Progressives should embrace tax simplification.

Why? Think about the system we have today. It’s so Byzantine, so complicated, that the average person can’t file their taxes without the help of a tax advisor and/or tax-prep software. And that’s even if you have a simple return — God help you if you do anything out of the ordinary, you’ll be plunged into a thicket of regulations so impenetrable that you might as well just throw a dart to see how much you owe.

You know all that already. But why should it be a progressive cause to simplify the tax code? Because every dollar that is spent on help deciphering the tax code is, in effect, payment of a hidden tax. Call it the Complexity Tax — and it falls heaviest on those at the bottom of the income scale, since they can least afford to shell out $50 on a copy of TurboTax.

(In recent years, the IRS has helped mitigate some of that impact with its FreeFile program, which allows taxpayers with income under $50,000/year to use online tax-prep software from participating vendors for free; but you can’t use FreeFile unless you click through to the vendor’s site from irs.gov’s FreeFile page, and how many low-income taxpayers know to do that? And what about the ones without Web access who’d be better served by installable software?)

Every year the system gets more complex, and people have to pay more just to keep up — money that they could better use to pay for food, shelter, and education. And as the complexity goes up, the frustration goes up with it.

Conservatives have already sussed this out, and are pushing alternatives like the “flat tax” and the so-called “FairTax” — both of which lighten the burden on the rich and increase the burden on the poor. In doing so, they’re following the time-honored GOP tradition of bait and switch, using people’s frustration with the complex tax code to try and convince them to accept a regressive system that would fall hardest on those who can least afford it

Progressives have an interest in seeing that not happen. One of our core values is that taxation should be, well, progressive — that those who benefit most from the services and protection of society should give the most back. But by being satisfied with the status quo, we put that at risk.

It’s possible to envision a tax system that is both simple and progressive, with taxpayers falling into a few broad tax brackets based on their gross income, and with many, many fewer deductions. It can be done. But will we do it? Do progressives have it in them to stand up for the little guy?

Don’t get me wrong. I don’t mind paying my taxes every year. I see quite clearly what I’m getting for that money — a life in a stable, free society, protected from those who would do me harm, with a range of opportunities to better myself. I’m not one of these “taxes are robbery” types. But if we want to maintain that society, we have to ensure that the tax system works for the average person, not just the accountants and the tax attorneys. Right now, it doesn’t; and if we care about ensuring a future where everyone pulls their own weight, we should fix it before some soak-the-poor bozo “fixes” it for us.

End of rant. Now get your 1040 filed 🙂