April is the cruelest month," wrote T. S. Eliot, and while he probably wasn't referring to America's annual Tax Fest, no one would have complained if he was. The nation's tax code has grown so complex and so incomprehensible that no one even talks of reform anymore; the only way, say some people, is to scrap it entirely and start over.
The major problem, at least as I see it, is that the government has always seen fit to use the tax system to enforce its attempts at social engineering. It is presumed to be a Good Thing, for instance, for people to own their own homes, and so the interest paid on the acquisition of those homes becomes deductible. It is likewise considered a Good Thing to pay one's state and local taxes, and they, too, are deductible on Schedule A. (In Oklahoma, the converse is controversial; on the state's Form 511, the standard income-tax return, you may deduct the amount of Federal income tax paid, but you must pay a higher rate if you do so. Other states may have provisions this asinine, but I have yet to hear of any.)
But even if it were the government's job to designate official Good Things, that doesn't mean it is also the government's job to subsidize them through the tax system. What's more, if it's not deductible, it's presumed to be a de facto Bad Thing. Savings and investments, economists will tell you in their more lucid moments, are essential to a growing economy, perhaps more than home ownership and definitely more than paying state and local taxes. But under most conditions, money you save or invest is not deductible, and anything you earn from it is taxable. Does the government presume that to save or to invest is Bad? Or does it just want money, any way it can get it?
The list goes on and on. And every year about this time, I start wondering why I should go to all this trouble for the dubious privilege of adding five grand to government coffers. In anything resembling a rational tax code, no one would have to fill out anything much more complicated than the current 1040EZ. It remains to be seen whether Congressional Republicans are interested in a rational tax code, or simply want to enrich their backers; on the other hand, Democrats in Congress seem willing to defend the current non-system at any cost. You can bet that if nothing happens this year, the tax system will be a campaign issue next year, and even if people hate the GOP, they really, really hate the IRS. Can the Democrats get themselves out of this self-dug hole? Watch this space.
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Copyright © 1997 by Charles G. Hill