We Have to Have Taxes, but Could They be Less Taxing?

Have you filed your income tax return yet? April 15 is just a few weeks away. It’s an annual ordeal for Sandra and me. We wait till the last minute every year and scurry about trying to find someone who knows how to do these things. Surely, paying taxes shouldn’t have to be so taxing?

Of course the more complex and burdensome the process the more work it provides for the “experts.” That might be one reason the massive and convoluted tax code never gets simplified despite politicians’ perennial promises to do so.

A lot of the folks I talk with in this part of Florida – Republicans of course – favor the flat tax floated by conservatives from the dawn of time. They figure everybody should just pay 10 percent of their income with no exemptions. After all, isn’t that what it says in the Bible?

I’ve even seen bumper stickers declaring that “if Ten Percent is enough for God it should be enough for the Government.”

But where does that leave the special interests who are the backbone of the Republican Party? Rich people and giant corporations like General Electric would have to actually start paying taxes instead of just complaining about them. With the web of complexity created by the current system, they can hire smart accountants and lawyers to weasel them out of paying any taxes.

At least they’re providing employment for the accountants and lawyers, so the system is not entirely without its benefits.

It seems everybody has been promising to do something about the tax code. President Obama wants to close “loopholes” that the rich use to dodge their “fair share” of taxes, for example. And the Republicans want the poorest Americans to shoulder a bigger share of the tax burden. The rich pay far too much already, Republicans argue. It’s the poor – the infamous “47 percent” – who are shirking their duty to the country.

One thing everybody seems to agree on: the current four million-word tax code is absurdly cumbersome and blatantly unfair. Taxpayer Advocate Nina Olson says it “inflicts a significant, even unconscionable burden” and is so complex that the Internal Revenue Service has severe difficulty administering it.

From time to time, some ambitious politician comes up with “the answer” to America’s unfair tax system.

One proposal surfacing in this morning’s news is from Representative Dave Camp, chairman of the House of Representatives Ways and Means Committee. Camp is a Republican so I suppose it was only natural for him to seek relief for his rich pals.  Not surprisingly, he wants to slash the top income tax rate to 25 percent from 39.6 percent.

According to news reports, the plan would also reduce the U.S. tax brackets from seven to two – 10 percent and 25 percent.

Some affluent folks wouldn’t get off quite that easily, however. Camp would impose a 10 percent surtax on certain kinds of earned income above $450,000 a year. The surtax would hit salaried professionals like lawyers and accountants, but not farmers and manufacturers. (I imagine Camp’s campaign contributors must include a lot of farmers and manufacturers, don’t you?)

Camp’s plan would eliminate some existing exemptions to make up for lost revenue, but news sources haven’t yet been able to determine what breaks are targeted. My guess is they include the home mortgage interest exemption, which is the biggest boon to middle class families, not the more exotic provisions that allow corporations and the rich to shelter their income on shore and off.

Not that it matters, of course. Camp’s plan is just election-year fodder. Like the myriad proposals floated over the years, it has zero chance of becoming law.

Photo above shows National Taxpayer Advocate Nina Olson with those bulky tax code volumes.  (AP Photo/Susan Walsh)

Click for the AP story.

Click for the President’s proposal.

Click for more on the existing tax code.