No tax reform in sight in near future

If you haven’t already struggled with your 1040 forms, receipts,
1099s and W-2s
– or paid someone to do it for you – here’s a gentle reminder:
You have less than three weeks left to meet the April 15 deadline
to file your state and federal tax forms.
Yes, we know, shivers.
If you haven’t already struggled with your 1040 forms, receipts, 1099s and W-2s – or paid someone to do it for you – here’s a gentle reminder: You have less than three weeks left to meet the April 15 deadline to file your state and federal tax forms.

Yes, we know, shivers.

Every spring, taxpayers are reminded that the supposedly temporary income tax has sprouted roots and established itself as a permanent fixture in our government and economy. It has grown dramatically from its original 3 percent rate, when it was established during the Civil War, and has multiplied in complexity.

Every spring, as sure as mustard will bloom in the orchards of Northern California, tax reform proposals will pop up in the American political landscape.

Sometimes you hear about a national sales tax, sometimes called a consumption tax. Other times you hear dreamers describe a flat tax with a postcard-sized tax form. We’ve even heard a proposal to fund the federal government exclusively by placing tariffs on goods being imported into this country.

Here’s what Federal Reserve Chairman Alan Greenspan told Congress on March 3: “Many economists believe that a consumption tax would be best from the perspective of promoting economic growth – particularly if one were designing a system from scratch – because a consumption tax is likely to favor savings and capital formation.”

While we won’t argue that our tax system needs reform – after all, who could? – we don’t see it happening, for a few reasons, one of which Greenspan alluded to in his comment to Congress.

It’s highly impractical to move our economy from its current system, unfair and complicated as it is, to a different one. We wouldn’t be designing our tax system from scratch, so there would be a whole host of unintended and undesirable consequences from such a move.

After all, if the government can’t get its own economic forecasts for budgeting anywhere near accurate, how can we expect it to predict correctly the impact of such a major change? We can’t.

Second, it won’t happen because politicians like the control the current system gives them. If they want to encourage marriage, childbirth, home ownership or anything else, the current tax system gives them the tools to do it. A simplified tax system would make that nearly impossible.

So, if you get through your taxes each year by dreaming of a simpler system, we hate to burst your bubble: It might be a good idea; it’s certainly a pleasant fantasy, but it’s not going to happen. But of course, there’s always fairtax.org …

Leave your comments