Thanks to the beneficence of the federal government (and the calendar), we Americans have until midnight on April 18 to file our income taxes. It’s too bad filing taxes wasn’t an easier process.
President Trump has pledged to reform our tax code, which, to most people, currently reads like a foreign language. Mr. Trump said tax reform would be a top priority for his administration, but he is up against powerful lobbyists working for the tax preparation industry and also charitable and other organizations who want to keep things just as they are, since some donors would be less likely to contribute if they lose their ability to claim deductions on their taxes.
Does anyone believe this tax code language is something we should maintain? “Enter 6 percent of the smaller of line 40 or the value of your Archer MSAs on December 31, 2015, including 2015 contributions made in 2016. Include this amount on Form 1040, line 58A or Form 1040NR, line 56B.” This little gem is in T.R. Reid’s book “A Fine Mess,” a work about our tax system that should raise the ire of any taxpayer not already irate.
Business Insider calculates that 31 countries have a simpler tax code than the United States. Estonia ranks first in simplicity. Estonia.
The federal government collected record amounts of individual income taxes and payroll taxes through the first six months of fiscal 2017, according to the Monthly Treasury Statement published by CNS News.
Through March, CNS’ Terence P. Jeffrey reports, “the federal government collected approximately $695,391,000,000 in individual income taxes. That is about $7,387,280,000 more than the $688,003,720,000 in individual income taxes (in constant 2017 dollars) that the federal government collected in the first six months of fiscal 2016.
“The federal government also collected $547,491,000,000 in Social Security and other payroll taxes during the first six months of fiscal 2017. That is about $2,731,820,000 more than the $544,491,000,000 in Social Security and other payroll taxes (in constant 2017 dollars) that the government collected in the first six months of fiscal 2016.”
After all that revenue collection (and there is much more, as every taxpayer knows who purchases any product or service, from your telephone bill, to a ticket on a commercial airline), the Treasury still ran a deficit of $526,855,000,000 in the first six months of fiscal 2017.
As Ronald Reagan said, the reason we have a deficit (and a debt approaching $20 trillion) “is not that people are taxed too little, the problem is that government spends too much.”
In a recent interview on NPR’s “Fresh Air” program with Terry Gross, Mr. Reid said: “I was in the Netherlands on March 31 — their tax day is April 1 — talking to a manager. He makes about $200,000 a year. He has a whole panoply of investments, two kids in private schools, two mortgages. He’d have to fill out 12 forms in the United States.
“And I said, Michael, how do you do your taxes? They’re due tomorrow. He says, well, I pop a beer. I go online and see if the government’s got the numbers right. And if they do, I hit a button. Takes five minutes. He says, but you know, sometimes I start checking the numbers. [If] you start checking the numbers, it could take almost half an hour just to pay your taxes. He was outraged.”
The U.S. government has all of our income information (W2s and 1099s). Most of us have a pattern of deductions, from mortgage interest, to charitable giving. Government computers could do the work and send us a bill for what we owe. We could check their numbers, add or subtract from them as warranted and be done with it, instead of enduring an expensive (if we must hire a tax preparer, as I do) and time-consuming experience no one enjoys. Instead, taxpayers struggle to decipher the undecipherable while politicians and lobbyists, who donate to their campaigns, continue to block comprehensive tax reform.
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