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