Complexity of United States tax code (1 Viewer)

[Jacob Mathai]

I saw this quote:
Douglas Shulman says he uses a hired tax preparer because the U.S. tax code is so complex. That's a bad sign. He's the I.R.S. commissioner.

my comment: what about ordinary folks like you and me?

 

[boblarson]

It is ridiculous. But it does keep a lot of people employed.

 

[Rabbie]

All tax systems seem to be extremely complex. Probably as a result of trying to stop people exploiting loopholes

 

[statsman]

It has been my experience that when the tax code is altered to plug one loophole it genrally opens another. The problem is the new loophole is only of use for those with very large salaries.

 

[Rabbie]

It has been my experience that when the tax code is altered to plug one loophole it genrally opens another. The problem is the new loophole is only of use for those with very large salaries.

This creates well paid employment for tax advisors

 

[The_Doc_Man]

Just remember that to anyone in government, "an acceptable level of unemployment" simply means "I've still got my job." The I.R.S. tries to assure that their department does not reach an unacceptable level of unemployment.

As to the craziness of the tax code, it came about when some [sarcasm]genius[/sarcasm] got the idea to use tax codes to motivate social reforms by giving tax breaks to things they thought were good ideas and tax hikes to slow down those things that were bad ideas. But of course, the Senate is a pot with 100 cooks. And their recipe is about what you would expect for anything done by a committee of 100. A recipe for disaster.

 

[Adam Caramon]

As to the craziness of the tax code, it came about when some [sarcasm]genius[/sarcasm] got the idea to use tax codes to motivate social reforms by giving tax breaks to things they thought were good ideas and tax hikes to slow down those things that were bad ideas.

You make it sound like that is a terrible thing, but it really is a useful tool of government. Army recruitment low? Make the signing bonuses higher. People have a nasty habit that costs millions upon millions of healthcare dollars/year? Raise the taxes on cigarettes.

Granted, some of the things the government supports/hinders many people will take exception to. Overall, I think that government involvement is a net gain for lower middle class - poor people and a hindrance to upper middle class - rich people. That's why every election we get to hear about the "size" of government from the Republicans.

 

[kevlray]

I listened to a financial advisor this morning on tv and he explained everytime the government spends more money (especially when it really does not have it), it is really taking money away from the private sector.

 

[ChipperT]

The complexity of tax laws are such that, no matter how consciencious, careful and honest you are, you are almost sure to be in violation of many of them. Maybe that's the purpose!

 

[Thales750]

I listened to a financial advisor this morning on tv and he explained everytime the government spends more money (especially when it really does not have it), it is really taking money away from the private sector.

Yes and no. What really takes money away from the private sector is hording by the ultra rich.

 

[The_Doc_Man]

Got that one smack on, Thales. Money at rest does no one much good. Money must be in circulation to have a stimulative effect on the economy. Money doesn't circulate if no one buys anything. Money in the bank, particularly when there is a low banking interest rate, is a cushion but nothing else. Granted, I don't want to give up my cushion, but after a certain point, it is better spent than saved. Finding that balance point is the hard trick.

 

[Rabbie]

The complexity of tax laws are such that, no matter how consciencious, careful and honest you are, you are almost sure to be in violation of many of them. Maybe that's the purpose!

You've got it Stops people complaining too much to the authorities in case they check every obscure rule has been complied with

 

[Lightwave]

I always wondered why we couldn't have just one tax.

VAT or goods and services tax as they call it in Oz.

Allow governments to tweak the levels but not the fundamental concept..

Tax the rich by raising the level on posh goods
No tax on widescale necessities.

How much you pay in tax will therefore be a measure of your profligacy and efficiency?

Sounds simple to me.

While I'm at it
No private education
Meritocratic higher education for all although maybe limited in places according to job demand. ( you can't pay everyone to be a lawyer )
No denominational schooling
And get rid of catchment areas for school instead ranking should be 1st sibling 2nd distance to school.

My conclusion - people just want to be treated fairly and equitably.

 

[the_net_2.0]

the complexity of the tax code and other things in the USA is what keeps capitalism going. Seriously. If it wasn't complex, that would mean that the two parties aren't arguing anymore about what's best, and that's NOT good.

Quite frankly, I get sick and tired of the power-driven politicians trying to implement tax laws that take from people who work their a**es off trying to make themselves and giving it to the rest of the people. I will never support that. It promotes laziness, overwhelmingly, and most people that I know also know that if you give a person a cookie out of the cookie jar that person will want the whole damn jar.

I'll never really know if people in Congress actually understand that about humans or not. If they do, that makes them all the more evil, because they're using that fact to gain more power. If they don't, then I give them a little bit more credit for their work, which is still not much more than a spec in the wind.

 

[Steve R.]

One reason for why the US tax code is insanely complex is the perpetual quixotic quest for "fairness". Fairness, is an elusive motherhood goal that can never be achieved. What is fair for one person may not fair to another person. Essentially equivalent to a dog chasing its tail.

Another major reason for insane US tax code complexity, is that the US economy is now based on "bread and circuses". Our politicians, to get reelected, liberally throw out "tax incentives".

At a somewhat deeper level, the US is now using the tax code to mimic the old USSR planned economy.

By coincidence there are two Dilbert Cartoons that speak to tax incentives distorting capital markets.

 

[ChipperT]

I have often wished for a legislative moratorium for 10 years that would go something like this: For every new law passed, you must repeal 2 old ones. After the moratorium it would just be a one for one replacement. That would apply to all laws and all levels of government. I figure it would take the 10 years just to get rid of the outdated laws no one follows anyway, like the one that says autos are banned on downtown streets during daylight because they scare the horses (a real law still on the books in Tennessee) and reduce the number of laws by half.
It is really too bad that Mr. Benjamin Franklin did not get more of his ideas of government in place, such as the idea that the Federal Government could pass any law it wanted as long as they could pay for it out of their own pockets (except for militia). Would make for an interesting system - but then we would have never gone to the moon.

 

[Steve R.]

Quite frankly, I get sick and tired of the power-driven politicians trying to implement tax laws that take from people who work their a**es off trying to make themselves and giving it to the rest of the people. I will never support that. It promotes laziness, overwhelmingly, and most people that I know also know that if you give a person a cookie out of the cookie jar that person will want the whole damn jar.

For simplicity, there are two types of taxes. One as a necessary revenue source to operate the government. This is a legitimate use of taxes. Unfortunately this aspect of taxation tends to get pushed aside in the overall tax debate.

The other form of taxation is the "transference of wealth". That is taxing a certain segment of the population and giving the collected money to the "disadvantaged" target group. As our budget deficit grows and grows, we can't keep giving money away that we don't even have. We can't afford to have everybody collecting unemployment. And as you point out our elected officials do not seem to understand this. To make matters worse, Obama's State of the Union Address perpetuates the use of taxation accounting gimmicks under the guise of "investment". (Transferring wealth from the taxpayers to businesses under the pretense of economic stimulus.)

 

[ChipperT]

For simplicity, there are two types of taxes. One as a necessary revenue source to operate the government. This is a legitimate use of taxes. Unfortunately this aspect of taxation tends to get pushed aside in the overall tax debate.

The other form of taxation is the "transference of wealth". That is taxing a certain segment of the population and giving the collected money to the "disadvantaged" target group. As our budget deficit grows and grows, we can't keep giving money away that we don't even have. We can't afford to have everybody collecting unemployment. And as you point out our elected officials do not seem to understand this. To make matters worse, Obama's State of the Union Address perpetuates the use of taxation accounting gimmicks under the guise of "investment". (Transferring wealth from the taxpayers to businesses under the pretense of economic stimulus.)

Steve, you say that "transference of wealth" is taxing a certain segment of the population and giving the collected money to the "disadvantaged" target group. But then your argument breaks down when you say we are giving money to the "disadvantaged" is money we don't even have, so it is not a transference, is it? So the "rich" keep their money and the rest of the taxpayers are saddled with the burden of paying the bill.

 

[Steve R.]

Steve, you say that "transference of wealth" is taxing a certain segment of the population and giving the collected money to the "disadvantaged" target group. But then your argument breaks down when you say we are giving money to the "disadvantaged" is money we don't even have, so it is not a transference, is it? So the "rich" keep their money and the rest of the taxpayers are saddled with the burden of paying the bill.

Ah - bonds and treasuries, we are borrowing the money from China! To make matters worse, our tax rate is technically "too low" since we are not raising sufficient revenue to cover the free Obama money being flagrantly tossed out.

Great response - gives me the opportunity to post this link to the Chinese Professor.

A credit card analogy can also be used. We are buying products on credit with money that we don't currently have. For normal people this would come to a screeching halt fairly quickly when the credit card companies realize they aren't going to be paid and they cancel the credit cards. Countries like China, may come to the same conclusion and stop buying our debt. Then, in theory, at some point, taxes will have to be raised to cover our debt burden. But until then it is spend, spend, spend, spend!!

 

[the_net_2.0]

You guys are also missing another point...the majority of growth in t his country comes from the wealthy people and their decisions to participate in that growth.

What is POOR? IMO, all of these combined:

• lazy people
• unfortunate people
• people that absolutely cannot grow an economy, even they tried
• people with a lack of brain power to help themselves
• people who hide money when they actually have it

with all of those types of people combined, being poor is obviously overwhelming.

As far as whether or not leaders are not intelligent to understand what I said earlier, that cannot never be deduced successfully, unless mind-reading technologies (and the right to scan politicians' brains) ever comes to fruition. Obviously it won't. But I will say that because we in the USA right now, seem to be wanting to do anything and everything possible to stop business growth and save trees, this fear can exploited by government officials more successfully than ANYTHING else in the past. They have two things to gain from endorsing this fear and telling people that saving the environment is all the matters:

• their power increases dramatically, because the power of private business people will fade away
• they can stick people in boxes, and suppress the desire to want anything out of life, which is what happens when you aren't offered resources to grow with

Personally, I think the "gods" of the government are what really matter...as in, they are the ones that are smart and know what they're doing. Anyone ever talked to an IRS tax agent in a call center? (not picking on them, but that's a great example here). I, for one, don't call the IRS anymore because most of the people I talk to only know what buttons they have been told to push by the script writers. I know more than they do simply by guessing and googling! So why call??

That's off topic I suppose, but if any of you guys have kids, I know that shapes your vision of what should be going on more than anything else. This government is no different than any other one, but one single fact DOES remain about politicians and their ability to see other peoples' views. NONE of them can understand what people like us, with our own kids, are seeing the future as being. Personally, I don't care what it is at this point because I don't have kids. They can destroy it all they want to, but I'd sure like to have kids someday, but if I don't see any improvement in the government's abilities to work for other people, there's no way in hell that's going to happen. I simply won't do that to a child.

There was a news story about a London based couple not too long ago that I saw. They were telling the interviewers that their child was very smart, but they didn't have the financial resources to give him the opportunities that he deserved out of life, so they let a rich couple adopt him (or something like that). At any rate, he ended up in a household with rich parents.

That's the smartest thing they could've ever done for that kid. At least their thinking about people of the future! That's the only news story I've ever found to be truly inspiring...