As America once again considers tax reform, with President Trump promising the greatest tax cut ever, the nation faces many choices. We could attempt to shore up the individual income tax, or move to a more consumption-based system. We could lower all rates, or just raise the standard deduction. We could cut the payroll tax instead of or in addition to the income tax. We could flatten tax rates or make them more progressive. We could reform and make corporate taxes more sensible, or even eliminate them altogether. And so on: there are many options.
Over such issues, involving the substance of tax reform, there is reasonable room to debate. But there is little room to debate the deeper problems arising because of how tax laws are written, expressed, and understood. We are approaching if we have not already arrived at a crisis in our democracy because of the form of our tax laws.
Simply put, the overwhelming majority of Americans simply cannot understand the basic details of the tax system governing them. This leaves tax policy to get developed and implemented by politicians, influenced by rich and powerful patrons and interest groups, loosely informed by experts, all operating behind a steep wall of complexity. Even if we assume that all expertise in tax is promulgated in good faith — free of any corrupting influence or self-interest — it is easy enough to find experts on all sides of any given issue, to pick and choose among expert analysis or even within the work of individual experts, to misrepresent, distort and take matters out of context. The media itself struggles to see what is happening amidst the fog of tax. No one is left to watch the watchdogs of tax policy, because no one can understand what is going on.
Therein lies a considerable rub. The American people have turned over the control of the tax system, which takes on average about one-third of their incomes, to others. Is it really any surprise that these others — politicians who need and want money, the rich who can afford both to figure it all out and to pay to get politicians to do their bidding — have exercised their unchecked power in their own self-interests? Such is human nature. Without accountability, the rich and powerful have been able to create a tax system that highly favors them, without the people being able to figure out the tricks. The system is rigged. The complexity of policy is a key ingredient of the rigging.
This is why I, an aging law professor who has tried to reach out to a wider audience over the years, decided to start a 501(c)(3), The People’s Tax Page, together with a small band of committed students. We are a nonpartisan group, dedicated to explaining basic concepts of tax and public finance to as many people as possible. We are making cartoons and short videos featuring cute children (disclaimer: a couple of the cute children are mine . . .). Our first “season” explains how the rich, those with wealth, can easily avoid paying any tax using the three steps of what I have called Tax Planning 101: Buy, borrow, die. Here’s our short animation that explains this concept:
... The People have the power in a democracy. But power without knowledge is a weak tool. The People’s Tax Page aims to restore some power to the people by giving them more knowledge about tax. Please visit us, and help us to help the people ... before things get worse.