The Money Will Come From Somewhere

Republicans don't want to slit their own throats before the election by identifying what taxes they will raise to run the government and reduce the deficit.  They probably don't want to slit their throats (or have them slit for them by Grover Norquist) after the election, either. 

If the Republicans win the White House and both houses of Congress you can expect to see a two pronged approach.  Republicans will need to contort the tax system to avoid the appearance of raising tax rates, while at the same time increasing revenues through other gimmicks:

1.  Republicans will not increase tax rates per se.  They will reduce tax deductions.  This will have the same effect, increasing net revenue.  But those Republicans who signed Grover Norquist's pledge will be able to take cover behind level tax rates.  Reducing deductions will require massive changes to the tax code.  The Congress doesn't just rip old statutes out of the old tax code.  It writes new code to explain what has expired and what new statutes take the place of the old.  The code will explode with new definitions and procedures.  The mushrooming tax code will magnify complexity and confusion for tax payers and collectors alike.

2.  The Republicans will likely avail themselves of what has become a growing trend.  Penalties!  They will increase penalties and interest charges levied against taxpayers who are caught up in the new tax code complexities (See #1).  The complexity of the new and improved tax code will cause confusion and thereby enhance the opportunities to levy penalties.  Raising penalties, not taxes, will theoretically avoid the wrath of Americans for Tax Reform President, Grover Norquist. 

It appears to us, Citizens for Tax Complexity (CTC), that the Republicans have come up with a plan to have their cake and eat it too.  They won't raise taxes.  They will raise revenues in the forms of additional penalties and interest.  They will accomplish this with increased tax code complexity.  This bodes well for all of the bureaucrats, politicians, tax lawyers and accountants who we strive to represent.  It feels good to be on the winning side.

Thank you for your attention.

Citizens for Tax Complexity

FOOD ON THE TABLE

Americans are by and large a generous lot.  We wouldn't want to take food out of the mouths of children.  Tax complexity feeds a lot of families in this country.  Perhaps not yours, but according to Face the Facts USA, "We have more professional tax preparers in the United States than law enforcement officers (765,000) and professional firefighters (310,400) combined."  There are more than 1.2 million tax preparers, according to the Internal Revenue Service.  Tax complexity drives one of the largest industries in our economy.  We must protect it.

Here is a link to Face the Facts USA, where they examine Tax Complexity.

Please support our movement to protect Tax Complexity and this important segment of our economy. 

Here are five things that you can do:
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Thank you for your attention.

Citizens for Tax Complexity

Neither Broken Nor Ugly


In his recent article, The Tax-Code Mess, Chris Edwards, Director of Tax Policy Studies at the Cato Institute and the editor of  Downsizing Government.org, describes the current tax code as ugly and in need of a fix:
In recent weeks President Obama has been on a quixotic search-and-destroy mission for the few remaining millionaires who aren't already paying a huge pile of taxes. Meanwhile, the rest of us face the real-world struggles of filing our IRS returns and dealing with the hugely complex tax system that the president has done nothing to fix.
The federal tax code is getting uglier every year as politicians from both parties add more credits, deductions and other special breaks. In the first year of the income tax in 1913, the 1040 tax form came with just one page of instructions. This year the instruction book for the 1040 is 189 pages long.
The President knows to leave well enough alone.  After all, he has been elected to the highest office in the land, unlike Mr. Edwards.  The President has placed his faith in the hands of the countless legislators who, since 1913, have diligently labored to enhance and improve our federal tax code.  This President knows, as did his predecessors, that the tax code does not  need to be fixed.  It needs to be followed.  Clearly, Mr. Edwards fails to see his responsibility as a compliant follower.

His contention that the tax code is ugly and getting uglier every year only underscores his lack of understanding of the purpose of the tax code.  It is intended to be complex.  That's the beauty of it.  The tax code and the bureaucracy built up to administer it are among the most perfect examples of human ingenuity.

The tax code, as authored by the legislative branch and executed by the IRS, is perfectly designed to meet its intended ends.  It is neither fitting nor fair to apply Industrial Revolution era expectations for efficiency, simplicity or productivity to an ideal, bureaucratic system. 

It is the purpose of the IRS to collect revenues that are required to operate the federal government.  The IRS has three sources of revenue; taxes, penalties and interest.  The IRS does not control tax rates.  Congress does.  But the IRS does influence or actually determine penalties charged for lack of tax compliance as well as interest charges for taxpayers who fail to comply in timely fashion.  So, to achieve its purpose, the IRS has ingeniously compounded tax code complexity to increase the revenues it can collect as penalties and interest.  Tax code complexity causes confusion for taxpayers and for IRS employees.  Confusion causes mistakes.  Mistakes can be penalized or assessed interest fees.  The Congress is fine with this arrangement because the members of the Legislative Branch hate to risk their positions by voting to increase tax rates.   Under this mutually beneficial arrangement tax rates can remain the same while the IRS increases revenues through penalties and interest fees.  It is perfectly designed to increase revenues while reducing risk.

We invite Mr. Edwards to review our posts and, once he has converted, to join us in our mission to accept the inevitable and state the obvious.

Thank you for your attention.

Citizens for Tax Complexity


Edwards, Chris. "The Tax-Code Mess." The Cato Institute. April 16, 2012. 2 Aug 2012







Tax Reform Could Destroy The Economy

The unintended consequences of "fixing" the federal tax code could devastate our economy by exterminating one of the largest industries in the nation, the tax compliance industry.

In her 2010 Report to Congress, Nina E. Olson, National Taxpayer Advocate and head of the Taxpayer Advocate Service (TAS), reported:
A TAS analysis of IRS data shows that taxpayers and businesses spend
6.1 billion hours a year complying with tax filing requirements. To
place this in context, it would require more than three million full-time
employees to work 6.1 billion hours, making 'tax compliance' one of the
largest industries in the United States.
Simplification of the tax system would not require as many people to work as many hours.

It would be irresponsible to strain our fragile economy by putting even a modest portion of tax compliance professionals out of work. Think of the impact on the economy if the government shuttered one of the nation's other large industries, like the auto industry.  We simply cannot afford to shut down one of the nation's largest industries.

Complexity has been working for us. It causes the employment of millions of Americans.  Congress should not tamper with it.

Thank you for your attention.

Citizens for Tax Complexity