Okay, boys and girls, get ready for another pop quiz….put away those IPADs and IPHONEs… clear your desks…and answer this question:
How many pages are contained the the current US Tax Code?
If you guessed 20,000, you’re way low. In fact, from 2006 through 2010 alone, the number of pages in the tax code increased by more than twice that amount!
The US Internal Revenue Service (IRS) is the agency responsible for overseeing the collection of income taxes in the USA. All persons/companies earning income in the USA (above a very low amount) are required to file an annual income tax return with the IRS and pay any owed taxes by the filing deadline, which is April 15th. That date could very well be called the “National Day Of Dread” by any taxpayer who is self-employed, owns a home or other property, has rental property, investments, uses a home office, has employee business expenses, pays taxes to other entities, has a spouse who is self-employed, and/or any of hundreds of other conditions.
Over the years, the US tax code has been modified by legislation to cover all kinds of special circumstances. It now contains an unfathomable number of complex, interacting conditions that people must navigate in order to file their returns; for instance, single, married, head of household; if married, filing jointly or separately? And how does they know which is most advantageous? They have to figure it out both ways first. And they do file separately, who gets the home mortgage deduction, or the medical expenses, or the home office expense? Who has to depreciate rental property, and how do you do that, anyway?
Very-highly-paid lobbyists have been extremely successful at getting legislation passed which benefits their very-highly-paying corporate special interest clients. As a result, the tax code has become this bloated behemoth monstrosity within which is buried the information and requirements that the average taxpayer must find, apply and adhere to in order to complete his or her tax return. Because of the incredibly massive complexity of the code, many taxpayers shell out more money to cover the additional personal expense of engaging either a tax expert, tax accountant, tax lawyer, tax preparation company, and/or tax preparation software, to complete their tax returns The cheaper software is often used by taxpayers in the hope that they might save a bit of money over having to hire a human to do their taxes. But sometimes even the software screws it up. And the taxpayer pays for that, too.
Additionally, the Frankenstein-ish US tax code has become so complex and out-of-control that it is unlikely one will get the same end result from any two of the aforementioned tax prep methods. But if you get audited by the IRS, that won’t matter. The bean-counting IRS agents will still use the tax code in any way they can to get more money out of you.
Of course, the tax code could be simplified without seriously impacting the level of incoming tax revenue. But it would require that our legislators stand up to the special-interest lobbyists who have so successfully represented America’s richest corporate interests, such as the oil, health insurance, pharmaceutical, agri-business and other mega-industries. And as a result of those efforts, many of them pay little or no taxes at all!
For instance, the New York Times reported last week that GE paid no income tax in 2010, despite total profits of US$14.2 billion, and USA profits of US$3.2 (not to mention that their CEO earned double his income, too!). So these very-politically-powerful folks are in no rush to see anything change.
That’s really too bad, because there are already some well-developed concepts, any of which would be VASTLY SUPERIOR to the torture we endure today in trying to figure out our tax liability (unless you’re a very rich big business):
1. The “Flat Tax“, which would tax everyone at the same flat percentage of income, with no exceptions, exemptions or deductions;
2. The “Fair Tax“, also known as the consumption tax or national sales tax; and
3. The “2010 Income Tax Reform Plan“, in which deductions and loopholes are eliminated and the tax rates lowered to compensate.
But as long as the well-financed special interests possess their well-financed lobbying power over the US Congress, don’t expect to see any major changes, unless they further complicate and further expand the US taxpayers burden, not only in personal taxes, but the hours-long (and sometimes days-long) personal work required to find, gather, and organize the myriad dollar figures for eventual entry onto the tax form… work time that is uncompensated, by the way. After all, if it were compensated, it would have to be taxed!!
Unless you’re a big business, with staff on board which is a company business expense, don’cha know…WTF!
Oh, and the answer the pop-quiz question at the top of the article: According to answers.com….
(check it yourself HERE)