Wednesday, April 15, 2009

A Taxing Experience

As a general principle, I have nothing against paying my taxes. I don't get the hard-core libertarians who scream that taxes are tantamount to theft. Although I tend towards libertarian views most of the time, I accept the need for a government, and accept the need for said government to be funded. I see taxes as club dues. I accept the benefits of American society, and so the honorable thing to do is pay my dues. Welshing is for losers.

I'd be a lot happier if I had some way of knowing a priori what those dues are.

I know, I know, the Devil's in the details. Flat taxes, while simple, are regressive. But still: you know that your tax code is hideously broken when it's far simpler to explain how to plot a course to Mars by way of Venus than it is to explain how the hell you figure out how much you owe the taxman. I can do the former in about a page of mathematics. The latter ... well, I haven't done my taxes in the better part of a decade. It's a fringe benefit of having married a financial professional. But the computation is about five times more involved, easily.

I know it won't happen. There are too many people with their fingers in the pie. But please, for the love of God, can we have a simplified tax system? Something that's actually manageable by someone with a 12th-grade education? A system where you can plan ahead? I mean, I'm not asking for a tax cut. I'd gladly take a modest increase if it meant that I'd know on January 1st what I'd owe on December 31st. Most years, we're guessing.

We're guessing. I'm a few hundred pages short of a doctorate in Aerospace Engineering, my wife's a Controller at a major firm, and we're guessing. We guessed right this year, and didn't owe any extra money. But dammit, it ought to be possible, at least in principle, to figure out how much you need to withhold such that you cover your bill. But two educated professionals with more numerical acumen than any ten common citizens can't plan ahead with certainty. Honest, I'm not trying to brag, but if we're guessing, most people are hopelessly screwed.

If some kind soul would do a complete strip-down re-write of the tax code, it would be a public service. But like I said earlier, that won't happen. Not only are there too many vested interests, it's damn hard work. At the end of the day, you need a tax code that funds the Government's operations. The current one does, more or less, after a fashion. It's a damn nuisance for us for about a week out of the year, though.

It's not that I mind paying my share. I just want to know what that share is, ahead of time, that's all.


Burr Deming said...

Well reasoned observations.

Thank you.

Jack Jodell said...

I agree with you, Tim, and thank you for your thoughtful post here. Let's face it, though. The tax code is horribly regressive and so many loopholes have been devised for special interests that it has become a literal mess. Our tax system is far too complex and is totally abused by businesspersons and tax-hating Republicans alike. We need a far simpler and more progressive code which allows for legitimate exemptions but is far less slanted toward the wealthy.

Marc McDonald said...

The complexity of the tax code is not an accident. It is deliberate.
The IRS tax code takes up some 26 volumes. Those volumes are full of highly arcane, complex terminology.
The reason for this complexity is simple: it makes it easier to hide various tax loopholes for the wealthy.
The fact is, the notion that we have a "progressive" tax code in the U.S. is a fairy tale. Truly rich people pay far, far less a percentage of their income into taxes than working class people.
For more details, read "America: Who Really Pays the Taxes?" by Barlett and Steele.