Wednesday, January 18, 2012

Taxes Gone Wild!

If you happen to turn on a TV or surf the interweb this month, you will notice a plethora of advertising for tax preparation. In just over an hour of viewing last night, I saw no less than 6 spots.

Of course there is nothing illegal about a business advertising their services. I just find it amazing that we have reached a point in this great country that you have to pay someone to help you understand and file your taxes correctly. Does anyone else see a problem here?

I am not some radical that thinks we should pay no taxes. There are some basic Constitutional things like national defense that are worth paying the Federal government a portion of my income. And although I would argue that most of what is spent at the Federal level is completely wasted and unconstitutional, I will save that for a later blog.

What triggered this blog is the ridiculous notion that Americans will WASTE over 6 billion hours preparing their Federal taxes. A whole lot of time, money and effort will be spent attempting to avoid taxes, possibly in illegal ways. And it would be virtually impossible to know if you are breaking the law since there are now almost 4 million words of tax law that no human could ever fully consume. If you did break the law, how would you even know? Often, not even the IRS can tell you.

The tax code changes almost as often as the Texas weather, about every 15 minutes. There have been over 4,000 changes just in the last decade. In 2010 alone, there were over 500 changes! How could ANY citizen keep up with all of that.

Let's talk about economic drain. On top of the 6 billion man hours wasted, over $160 billion is wasted by people and businesses simply attempting to comply with this ever changing nonsense known as the IRS and tax law. Imagine $160 billion in economic stimulus. That might create a few jobs or even some new industries.

Its way past time to simplify the tax code. A very low, flat tax with virtually no freebies, deductions, or special favors for big donors and special interests would be ideal. Whether you earn $100 or $100,000,000, you pay the same percentage. The "rich" pay their fair share and so do the poor. Everyone has a stake in how their money is spent/wasted in DC. Businesses don't do silly things in an attempt to cook the books to avoid taxes. Its low enough and compliance is so easy, there is no need to spend money on hundreds of CPAs and attorneys. Businesses and individuals alike can focus on what really is important, the pursuit of happiness.

I suspect the net result would be an economic expansion as never before seen in our lifetimes and far less need for massive government handouts. As job growth and demand drives up wages, people may decide employment is in fact more beneficial than the scraps they get on the government plantation. And if Federal spending was drastically cut, you might witness a debt free America in your lifetime. That would be a hoot.

The data was borrowed from this article in 2010. I'm sure the numbers have only gotten worse.
Tax Waste: 6.1 Billion Hours Spent Complying With Federal Tax Code

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