It's time to do your civic duty and pay your taxes or rather for most of us, fill out a form to verify what the government already knows. It really is silly when you think about it, the IRS actually does your taxes exactly like you and if you make a mistake, they will correct it. Hell, they'll even correct it if you made a mistake in their favor and then refund you for the correct amount. So this begs the question, why do we need to file a return at all? Can't they just send us what they think our income was and ask us to either verify it or dispute the amount? Why all the extra confusing paperwork? I don't know with certainty, but I would venture to guess that it has a lot to do with why our government often does silly nonsensical things: lobbyists. Intuit Inc., the company that brings us TurboTax, ranks 702 of 16,793 in terms on campaign contributions according to Opensecrets.org. Tax preparers like H&R Block also contribute substantial donations.
There are other reasons for the complex nature of tax code. We use the tax code for many different policies from health care, to home-ownership, to disaster relief, to economic stimulus. Furthermore, every lobby imaginable gets their fingers into the tax code writing their particular exemptions in. Exemptions that effect an extremely small minority of taxpayers, but serve to gum up the system nonetheless.
Why not simplify the tax code? The reasons are both political and practical. Politically, everybody agrees the tax code should be simplified, but no one actually agrees about how to do that. This was the case even prior to our historically crappy Congress. Practically, there is a fair bit of uncertainty as to how simplification would effect how much money the government collects and how it would effect individual taxpayers. Which brings us to collection.
I have a confession to make: When I was younger I did some stuff for money I'm not proud of...I worked for the IRS. While not the worst job I've ever had, it certainly had some uniquely bad qualities. The particular campus I worked an was enormous maze of cubicles and I mean big. I wasn't able to get an exact figure in my ten minutes of research, but I'd estimate at total capacity it housed probably around 10,000 employees surrounded by armed guards and barb wire. Your bags were subject to random search on entry. It was like a prison with less sodomy.
The IRS hired me, put me in training for months which consisted of putting candy in front of me, and having a group of adults read out loud like 3rd graders from the Internal Revenue Manual which is quite possibly the most boring document ever created. After a month or two of this, they put us to work for another month and then furloughed us in time for Christmas. You think dealing with the IRS is bad, try working for them.
As bitter as I am about my short time with the IRS, the job of revenue collection is absolutely essential. America does not exist without the ability to collect revenue. Additionally, most of problems associated with the IRS are congress's fault. The IRS doesn't tax you it simply collects what congress has required them to and despite their problems, they do a pretty good job of it. We have one of the highest tax compliance rates in the world and for every dollar spent in enforcement we collect six dollars. What a great investment.
Despite all this, our annual tax gap (what should be collected vs. what is collected) still averages about $350 billion annually. Think about that for a second. Remember the budget sequester in 2013? That cut $85 billion. If our policy makers treated tax cheats like welfare recipients we might actually make some progress.
In closing how about a couple of ideas to improve upon the IRS:
- Fund them. Seriously, they generate revenue.
- Get rid of the tax return. Probably a pipe dream, but it would make all this so much easier and it would save on administrative costs.
- How about an itemized tax receipt? This would serve to educate taxpayers about where their money actually goes.
- Simplify the tax code and eliminate the vast majority of deductions. Just kidding, that will never happen.
Sources:
http://www.opensecrets.org/orgs/summary.php?id=D000026667
http://usgovinfo.about.com/od/smallbusiness/a/taxgap.htm
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