Friday, December 08, 2006

A Call To Simplify

Since the holidays are upon us, we all know what lies ahead. We don't know what we'll get for Christmas (most of us anyway.) We don't know what the new year will hold. Heck, most of us don't know what we'll have for dinner tomorrow, but there is one thing that will be coming that we can all count on. (No, I mean besides that supremely irritating Pizza Hut commercial where the guy gets such a kick out of thinking that he's cheated the delivery boy.) Come on, you can think of it. What is the one thing we can be sure of every winter, come rain or shine? What's the thing we dread, and some of us put off till the last minute every year, because we can't cope with the complexity of it all, but we know we can't avoid, no matter how many stars are the recipients of our most fervent wishes? I think you know where I'm going now, don't you? Say it with me, "The only things certain in life are death and taxes." Ben Franklin said a mouthful with that one, didn't he?

Why do we dread tax preparation so much, though? It's not just that we have to pay taxes; we've been doing that all year. A lot of us get money back when we file our taxes, so you'd think it would be something we would look forward to, but most of us don't. For me, some years aren't so bad, and I don't mind doing the paperwork too much. Ked and I have one income, from his salaried job, and no rentals or other oddities to muck up the works. Usually Ked's and my taxes are reasonably straight-forward, but we have had a few years, when the group we sang with made some money, where I was ready to cry (something I don't do easily) because the rules were so complicated and the IRS so scary. In the complicated years, I would spend hours fussing over endless details and number crunching. I spent enormous amounts of time just trying to make sure the forms were in the right order, and that wasn't even touching the issue of whether the numbers were right.

One of those years, we got a letter back from the IRS saying something was wrong, and we would have to re-file, but they didn't tell us what was wrong, so I went over and over the paperwork, trying to run down the problem. I also made a plethora of phone calls, shifting from government department to government department, looking for answers. I didn't want to just resubmit the return as I already had it, because I figured the same mistake would still be there, since I didn't know what the snafu was. It literally took months to get things straight--seven to be exact. You know what was wrong? (Of course not. Silly question.) When I sent in the forms, I had accidentally replaced the second page of the federal 1040 with the second page of my state tax return. That was it. That was the reason they told me to re-file everything, but since they didn't tell me at the time, I fretted and stewed until August, worrying about all the mistakes I could have made on the more than seven extra forms I had to fill out because my husband and I took home a grand total of $2,000 extra that year from singing gigs. You know, I have actually turned down multiple opportunities to make small amounts of money over the last several years, simply because I haven't wanted to complicate our taxes. The money hasn't ever been enough to make the added stress worth it. I don't know whether that makes me pathetic, or the tax code way too complicated.

In defense of myself, I'll say that I'm not the only one who thinks the system is way too complicated. There are a whole lot of people who agree with me, and some of them are making their voices heard in Washington. (Okay, they're speaking anyway. I'm not sure if anyone is listening.) In any case, a "...broad left-right coalition of groups today released a statement urging the next Congress to make tax reform a top priority." John Berthoud, at Human Events Online, writes that this coalition, despite ideological differences about such things as the size of government and redistribution of wealth, is composed of organizations that do all agree on certain basic ideas: the American tax code is too complicated, and government should not be spending more than it collects in tax revenue. Berthoud provides some empirical evidence to support my perspective that the tax code has gotten too complex:

Politicians have been yammering for years about fixing the disgraceful U.S. tax code, but while many members of Congress have “talked the talk,” few have made a real effort to “walk the walk.” In fact, during the period of Republican control of Congress, the tax code has been getting more complicated with each passing year. According to the annual tax complexity study of my group (the National Taxpayers Union), taxpayers this year had to deal with 142 pages of instructions for the standard 1040 form and schedules. That’s a hefty jump from last year’s total of 128 pages, and more than double the number in 1985 (the year before taxes were simplified.)
That's rather astounding, don't you think? Doing your taxes now takes twice as much instruction as it did before they simplified things in '85? Clearly, there's been some "unsimplifying" going on over the last twenty years. The response from the concerned coalition is a letter to Congress, released today, calling for a resimplification of the tax code, and fiscal responsibility on the part of government. According to to the letter, which they have titled Cleanse The Code, because of the complexity of the current tax structure, a large percentage of Americans are intimidated enough that they don't even try to do their own taxes, and, to make matters worse, hiring a professional may not solve the problem:

Filing taxes should be simple and fast for Americans, yet the plethora of tax credits, exemptions, deductions, special rates, and complicated rules can make filing a nightmare. According to the Government Accountability Office (GAO), 56 percent of Americans have someone else prepare their taxes. Most taxpayers should be able to calculate their taxes on a single form or no form at all, and in most cases by themselves, with a few hours or less of preparation.

Calculating one’s correct tax burden is further hampered by the ever-shifting compilation of rules that make up the tax code. The GAO recently tested 19 professional tax preparation firms, and found that not one prepared an error-free return and only two ended up with the correct refund amount.

Wow, even the pros can't get it right? Something's gotta give here. It's not right in the first place for the tax code to be so complicated that a majority of Americans can't do their own taxes, but when you get to the point where even the people we're hiring to do them can't get it right, things have gone sadly amiss. Here's my hearty amen to the bipartisan call to "cleanse the code." I hope the powers that be are listening. (Hope might be a strong word. Let's just say, "wouldn't it be nice?")