A call for tax reform

Colin Hannifin
Columnist

It’s that most wonderful time of year again. The trees and ground are green once again, with flowers are opening their buds, welcoming the warming rays of the sun. Sneakers are abandoned for flip-flops, and hoodies have been shelved. All of this confirms that it is indeed that time of year again: the time to pay taxes.

Federal tax returns are due tomorrow, so dig up last year’s W-2s and that 1098-T and try to figure out how they add up to a refund.

It’s one of the most frustrating parts of making money: Trying to comprehend the thousands of pages of confusing and contradictory instructions for unclear deductions. Send it in and you’ll wonder if you could have gotten a bigger refund. This annual struggle underscores the major problem surrounding the United States Tax Code: It’s conufsing and woefully in need of reform.

The tax code is written by seemingly well-intentioned Congressmen and Congresswomen, passing bills they believe will do their constituents or the country better. Every year brings a new host of minor changes, meant to encourage investing, new home purchasing or some other economic activity. Each minor tweak adds another layer of complexity and questioning, to the point where the IRS doesn’t even fully understand it. There are horror stories of law-abiding citizens getting harassed by IRS agents who have failed to understand their own tax code.

And while it’s easy to paint the IRS as the villain, they’re as much a victim as you and I. They’re handed a jerry-rigged code every year and asked to enforce it – a code that’s written by Congressional representatives seeking reelection, not clarity. All while they are deplorably understaffed and underfunded.

The mistakes the IRS makes, while severe and inexcusable, are the result of a too-small team trying to carry out a too-large task. Reviewing over a hundred million tax returns of varying complexity is no simple task.

It’s time to overhaul the tax system, for the good of the citizens and the country. There’s little doubt that revenue is of the utmost importance to our government.

It’s hard to estimate how much money is lost from people who don’t pay their taxes and just how much more is foregone for our convoluted set of deductions.

Mitt Romney recieved a lot of flak for his 15 percent effective, tax rate but in reality he just had a good advisor – and there are plenty of wealthy individuals who have similar advisors.

The proposed Buffett rule will hardly fix the tax system. It may make high-earning individuals pay more but would change little about the overall system. Instead, 26 years after the last major touch-up, our tax system needs to be torn down and rebuilt from the ground up.

There are plenty of proposals to consider. Milton Friedman, the late, famed economist, proposed and pushed for a flat tax coupled with a negative income tax. Others have proposed that the United States abandon income tax altogether and instead adopt a national sales tax. More peculiar proposals continue to exist.

No matter the proposal considered, each advocates a tax system that is substantially simpler and more straightforward than the one with which Americans are currently burdened. Almost any system free of the tangle of deductions and credits would be a vast improvement. Not only would the federal government receive more revenue while spending less chasing non-payers, citizens wouldn’t be left scratching their heads every April.

Ideally, our tax system should be excruciatingly equitable, whether you make $1 or 1 million dollars. Instead, we’ve been handed a tangle of schedules, forms and publications and asked to sort them out.

The system is desperate in need of fixing. Until that happens, good luck.