Among the recent letters to the editor in my local newspaper is one hard to ignore … in that the submitter turns out to be the mayors and city council members of seven Orange County cities. Their concern is clearly stated. After pointing out “it’s been over 30 years since our tax code was last reformed,” they contend taxation in this country is too complex and “in order to make America competitive again and promote growth, we need to simplify the tax code so that everyone can understand it.”
There’s nothing novel in their plea. For as many years as I can recall, the complaint from every quarter is the playing field is uneven and that the time for change is long overdue. The claim is a simplification of the tax laws can benefit the ordinary citizen who doesn’t have an army of accountants and lawyers, to decipher the arcane rules which only the favored few can understand. I’ve heard the argument, over and over that our tax code should be simple and fair.
At first blush this certainly sounds reasonable, for who can object to fairness? However I have my doubts. Such a return may be easily prepared, but perhaps not equitably so. My concern is that as a return becomes less complex, the tax collector has fewer obstacles to overcome when ruling to assess a maximum taxable income. I’m convinced simplicity works to the benefit of the taxing agency, not the taxpayer.
A second aim is that our tax code should incentivize businesses to invest and grow. In theory this sounds commendable, but I suspect incentivizing will merely devolve into the creation of conventional tax credit incentives which are traditionally lobbied by ever more politically motivated campaign contributions. Unfortunately, the only way government encourages creativeness in business is by throwing money toward the source and hope something worthwhile happens.
I’ll add a final though. I’ve come to the realization there’ll be no viable tax reform proposals benefitting the taxpayer that come from government officials. This is true regardless of party affiliation or philosophical inclinations. The reason is fundamental. The contest is between those on the inside collecting the taxes vs. those on the outside paying the taxes. When dealing in the political world, don’t place much faith in pronouncements. The government wants only one thing from you; it wants your money.