By John Stossel
Its that joyous time of year: income tax time. So I spend time with my accountant. I dont want to see him but I must.
I could not do what hes doing. The tax code has grown so complex that today most Americans hire someone to do their taxes.
For the money I pay my accountant I could get a hundred massages. I could buy a fancy motorcycle. I could take a cruise ship to Venice and back.
Better yet I could do some good in the world. I could pay for two Habitat for Humanity homes or help three kids escape government schools by paying their tuition at a good Catholic school.
What a shame that I pay my accountant instead.
Howd we get to this point? U.S taxes were once simple! The government funded itself on tariffs and excise taxes. It didnt violate our privacy by asking us how much we made or how many dependents we have.
But in 1913 the politicians decided they needed an income tax.
At first they took little money: just 1 percent on incomes between $20000 and $50000. Those were big incomesadjusted for inflation $50000 is $1.1 million today. The top bracket paid 6 percent but that only applied to people who earned at least $11 million in todays dollars. Anyone who made less than $400000 paid no income tax.
But leave the amounts aside. The increase in complexity is just as evil.
In 1913 the first tax form and instructions totaled four simple pages. Todays 1040 with instructions totals 176 pages.
How did this happen? Because politicians win votes by giving gifts to favored groups.
On my FBN show tonight Ill show clips of the pandering legislators applauding themselves for offering tax credits to special interests. The favored groups cheer their tax breaks but the result is that everyone else pays more and everyone must spend more time deciphering the rules.
And with every credit the tax code gets more complicated. The code is now 3784745 words long not counting the 2009 and 2010 changes. It will get worse in the future.
Americans spend more than 7 billion hours trying to comply according to a forthcoming
study from the
National Taxpayer Union (NTU).
That is the equivalent of 3.7 million employees working 40-hour weeks year-round without any vacation. Thats more workers than are employed at the five biggest employers among Fortune 500 companies writes David Keating in the NTU study.
Counting time and money for individual taxpayers the compliance burden would total an incredible $103 billion for individual taxpayers alone.
That doesnt include the time spent doing state and local forms or more important: the burden of tax minimization strategies on the economy.
And we havent even mentioned the corporate income tax.
But dont worry. The IRS stands ready to assist the bewildered. If a taxpayer needs help beyond the basic form Keating writes the IRS now lists 1909 publications forms and instructions for download (some are duplicates in different languages) from its Web site
up from the 1770 NTU logged last year.
Thanks a lot IRS.
This is insane. How dare a government that supposedly serves the people impose on us this way?
Politicians who pass these tax laws arent our representatives. Theyre our rulers! They increase the tax burden and its complexity and then demand we pay them homage to get exemptions for little pieces of our lives.
What are we to do?
Some people say scrap the income tax for the Fair Tax a national sales tax. Others want a flat income tax of maybe 17 percent. One form; no deductions.
Theres always danger in proposing a replacement for the income tax: We could end up with two taxes.
I wouldnt put it past our greedy Congress to promise that a national sales taxor worse a value-added taxwould replace the income tax then once the new taxes are in place to say that the need for revenue is so great that they must retain the income tax too.
Lets not take our eye off the ball: lower and much simpler taxes.
John Stossel is host of Stossel on the Fox Business Network. Hes the author of Give Me a Break and of Myth Lies and Downright Stupidity.
