One Man’s Compliance Cost Is Another Man’s Income
By Robert Higgs on Mar 15, 2009 in Budget and Tax Policy, Economics, Politics, Taxation
Most people probably appreciate that complex tax laws constitute the raison d’etre for several professions, including tax accountants, tax lawyers, and most financial advisers. I would be extremely surprised to find lobbyists for these professions engaged in supporting tax-simplification legislation.
Each year, my accountant sends his customers a tax planner with a cover letter. This year’s letter includes the following paragraph:
There are many new tax laws this year. Every one of the Stimulus, Reform, Recovery, Correction, Relief, Equity, Protection and Prevention Acts contains hundreds of pages of tax law changes. My favorite is the Heartland, Habitat, Harvest & Horticulture Act of 2008, which changes the depreciation rules for race horses. We have reviewed them all and are prepared to take you through this complex mess. It’s not that confusing after you remove the exceptions to the exceptions. IRS is not smart enough to make it really hard.
I have been doing business with this accountant for about thirty years, and in that time his letters have always ended with the same words: God bless the IRS.
Uncle Sam could collect about 95% of his current take in personal income taxes with an IRS code about 80% shorter than it is. Really. There are so many phaseouts, exceptions, credits, etc., in the law, each of which involves only a few billion dollars and could be done away with reducing compliance costs significantly.
Independent Accountant | Mar 15, 2009 | Reply
Independent Accountant,
You’re missing the point. This isn’t about simplification. Congress makes the tax code complex on purpose.
A simple tax code would eliminate the need for buying/selling of favors, goodies, and hand-outs. Without that, lobbying would dry up. No lobbying, no campaign bribes.
They call this “public service.” I call it a criminal enterprise.
Steve Hogan | Mar 16, 2009 | Reply
A lot of people wonder where the “service” is in government service, public service and especially Internal Revenue Service.
Just remember the story about the two farmers talking in the general store. One said he needed to get a new bull to “service” a few of his cows.
Phill O | Mar 17, 2009 | Reply
Considering the new direction in Washington (okay, not really new per se, let’s call it “putting the pedal to the metal” on the direction that we started in the ’30’s) I question why we even have a tax code or IRS. The money isn’t used to service the debt—because it can’t, and the government is just making all of the money it needs… and all the money that the banks need… and all the money the insurance companies need… now all the money home owners need… Why not finally put it to bed, and stop taxing, and keep the printing presses running night and day, and see how quickly we can catch up to Zimbabwe?
joe4liberty | Mar 20, 2009 | Reply