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Who is Really to Blame for Bewildering Tax Rules?

Fri, 12 Mar 2010 00:00:00 EST | Tax Foundation's Tax Policy Blog

A bill is slowing making its way through Congress that would try to make government documents released to the public easier to understand. Specifically, H.R. 946 requires the use of "language that the intended audience can readily understand and use because that language is clear, concise, well-organized, and follows other best practices of plain language writing."

Whatever that means.

One huge target of this legislation is of course the IRS, a government agency notorious for its use of dense impenetrable language. But who is really to blame for that? Is it those hardhearted IRS technical writers? No. It is Congress.

Congress is responsible for our immensely complicated tax laws. Politicians have long used the tax code to win political points by rewarding certain activities, life choices, and financial decisions and punishing others. But all these policies necessarily complicate the tax code. The funny thing is that lawmakers don't really even understand the scale of the monster they have created. Searching for an answer to how long the tax code is, I stumbled upon this list of alleged quotes from politicians. My favorite is this one attributed to former Rep. Dave Hobson of Ohio: "the current tax code, which at 1.3 million pages is twice the length of Tolstoy's War and Peace." I actually picked up a copy of War and Peace in a bookstore a few weeks ago. It was long, but I don't think it was over 600,000 pages. But what are a couple orders of magnitude here or there?

According to Nina Olson, the National Taxpayer Advocate at the IRS, "the tax code has grown so long that it's challenging even to figure out its length." A study of the tax code conducted in preparation for her 2008 report to Congress pegged the code at around 3.7 million words.

Anyway, the point is that as tax laws become more complex, so necessarily does the language needed to describe them to the public. For example, there are at least 5 different definitions of who qualifies as your child for tax purposes, and all these definitions are required by the laws that Congress has passed over the years. Congress cannot craft a 3.7 million word document and expect the results to be "clear and concise." The IRS is not at fault here, lawmakers are. Trying to force the IRS to use "plain language" would probably just result in vague and ambiguous descriptions. And lest we shrug our shoulders and accept complexity as a minor price to pay, remember that tax complexity has real and substantial costs and contributes substantially to non-compliance. In Special Report on tax complexity we found that

In 2005 individuals, businesses and nonprofits will spend an estimated 6 billion hours complying with the federal income tax code, with an estimated compliance cost of over $265.1 billion. This amounts to imposing a 22-cent tax compliance surcharge for every dollar the income tax system collects. Projections show that by 2015 the compliance cost will grow to $482.7 billion.

If lawmakers want to make tax laws more understandable and less burdensome for Americans, how about starting with some massive simplification?


New-look Congress

Sun, 21 Mar 2010 19:16:24 GMT | Business Standard

The Congress party headquarters at 24 Akbar Road in the Capital is being revamped. While the basic structure will remain unchanged since it is in the Lutyens Bungalow Zone, the interiors are all getting redone and some general secretaries, who have been complaining of lack of space in their offices, may get new rooms. A new drainage system is also being put in place to prevent water-logging. Congressmen, who wish to see more of Sonia and Rahul Gandhi in the party headquarters, however, will have to wait since, due to security reasons, the two will continue to work mainly from their residences.


U.S. Congress passes historic health care reform bill

Sun, 21 Mar 2010 19:40:46 -0400 | canoe CNEWS

Summoned to success by President Barack Obama, the Democratic-controlled Congress approved historic legislation Sunday night extending health care to tens of millions of uninsured Americans and cracking down on insurance company abuses, a climactic chapter in the century-long quest for near universal coverage.


Congress approves historic health care legislation

Mon, 22 Mar 2010 01:01:11 MDT | deseretnews.com

Summoned to success by President Barack Obama, the Democratic-controlled Congress approved historic legislation Sunday night...


Conservatives Spawn New Non Profits Spending For Ads Attacking Obama And DEMS On Financial Regulation Reform Before Votes In Congress, And Midterm Elections

Sun, 28 Mar 2010 12:59:23 +0000 | Newsvine

A little-known group, the Committee for Truth in Politics, recently made a big splash[; i]t spent $5 million on television ads denouncing Democratic efforts in Congress to impose new regulations on the financial industry[; but t]he public can't find out who's behind the ads, beca …


Is a Constitutional Convention the Antidote to Congress?

Thu, 01 Apr 2010 15:50:20 GMT | WSJ.com: Law Tax Attorney

People don't like Congress these days. One potential solution, some think, lies in Article V of the Constitution, which permits states to call a convention for the purpose of proposing constitutional amendments.


To be or not to be

Sat, 03 Apr 2010 18:59:28 GMT | Business Standard

Even as Sports and Youth Affairs Minister M S Gill has got a renomination to the Rajya Sabha from his home state of Punjab, Congress circles are abuzz with the question that how long Gill would continue as the minister. A section of the party claims he may not hold the portfolio after the Commonwealth Games, which begin in October this year. A minister close to Prime Minister Manmohan Singh claimed the PM was not particularly happy with Gills bureaucratic approach. But, the minister would not be removed immediately, as that might hurt the preparations of the Commonwealth Games. According to large sections of the Congress, once the Games are over, a new minister can easily take charge.


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