Wow. Our experiment is off to a great start—let's see if we can finish it off sooner than expected.
Olsen estimates that individuals and businesses spend 6.1 billion hours preparing their returns. That equal to a year’s labor by three million full-time workers. Individual taxpayers are so befuddled by the Code that she reports 89 percent either pay a preparer or buy commercial software to help with the paperwork. The total cost of compliance in 2008, Olsen estimates, was $163 billion, or more than 11 percent of total income tax collections. The average out-of-pocket cost per taxpayer: $258. Something is very wrong when we have to pay a vendor $258 just to perform the most basic of civic duties.
....More troublingly, all this complexity is driving people to cheat. More than 60 percent of self-employed workers (whose income tax is not withheld) either under-report income or over-report deductions. Olsen attributes at least some of this behavior to taxpayers’ belief that they are paying more than their fair share while others are avoiding tax. Nobody, she says, wants to be a “tax chump.”
I don't disagree with this. I would love to create a simpler tax code, and on the business side I'd be willing to do away with the corporate income tax entirely. As a confirmed bleeding heart liberal, of course, I'd like to do this in return for a code that's more progressive and raises more revenue. But also as a confirmed bleeding heart liberal, I'd like to point out a few things about tax code complexity that our conservative aristocracy doesn't often acknowledge:
This post isn't a disagreement that we ought to have a simpler tax code. It's just a reminder that a big part of the reason for that complexity is that rich people want it that way. A simple tax code is hard to game, after all. If we really, truly tried to create a simpler tax code that removed all the common ways that high-income taxpayers fleeced the system, the loudest cries of anguish would come from conservatives, not liberals.