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 🙂
April 17, 2006
Isn’t having separate tax brackets what got us into this overly complicated tax mess? And New Zealand has found that having a complicted tax code doesn’t really gain them more “Fariness”. I’m sure you’ve already seen this but its worth a read:
April 17, 2006
“Isn’t having separate tax brackets what got us into this overly complicated tax mess?”
No. Having a zillion deductions is what got us into this mess. Determining whether or not you qualify for deductions is where you get into the weeds — gotta have rules for each and every one of them. (Not to mention that industries and interests love to get deductions written in to benefit themselves.)
There’s no reason why you couldn’t have a system with, say, five income brackets that would be dramatically simpler to administer than the current system — if you could get deductions under control.
April 18, 2006
I’m all for eliminating deductions and credits as well. I don’t see the point of having 5 brackets, why 5 and not 15? Why tax one group of people more than any other group of people. that doesn’t sound very fair to me.
April 18, 2006
“Why tax one group of people more than any other group of people[?]”
Because that’s what being progressive means.
We believe that living in America is a gift. But it’s a gift that’s not distributed equally. Some of us are blessed and live comfortable lives, others are not and struggle just to make it from day to day.
Progressives believe that those of us in the first category — those who have been blessed with greater prosperity — have responsibilities that go with that blessing. One of those responsibilities is to do a little more to maintain the system that we have benefitted so much from. We need to shoulder some of the burden so that our poorer brothers and sisters don’t have to. (Which gives them a better chance to become less-poor brothers and sisters, which is in everybody’s interest.)
April 18, 2006
“God help you if you do anything out of the ordinary, youâ€™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.”
Since we’re quoting each other, that line made me laugh out loud. 🙂
And speaking of the secret tax, it cost me $172 for help with filing my taxes this year. And I don’t even do mine itemized. Trust me, next year it’s back to doing them myself.
April 20, 2006
For those living at or under the poverty level, the FairTax removes the tax burden of payroll and social security taxes via the rebate, effectively making their rate *truly* 0% without the need for complex refundable credits.
For the working poor above the poverty line, the FairTax allows people to save pre-tax income, a benefit only enjoyed by those who can afford the complexity of IRAs and 401(k)s now.
Care to explain how this is regressive? Personally, I find it a lot more progressive than the current system.