Paul L. Caron

Monday, November 16, 2015

NY Times: The Tax Code Can Be Simpler, But Not Three Pages

CarlyNew York Times:  The Tax Code Can Be Simpler. But Not Three Pages, by Josh Barro:

All the Republican presidential candidates say they want to make the tax code simpler. But no candidate has been more aggressive about simplicity than Carly Fiorina, who says “our tax code needs to go from 73,000 pages down to about three pages.”

To be clear, Mrs. Fiorina is not calling for a three-page tax return. She is saying the entire tax law of the federal government — and apparently the accompanying regulations, since the Internal Revenue Code itself is 3,728 pages — should be just a little longer than this article.

On Tuesday, she pointed on Facebook to one way she thinks that could be done: by putting in place a tax plan proposed by the economists Robert Hall and Alvin Rabushka, who have produced draft legislation for a single-rate income tax that runs just 1,120 words.

“Reporters said it wasn’t possible,” wrote Sarah Isgur Flores, Mrs. Fiorina’s deputy campaign manager, on Twitter. “Once again, media was wrong.”

Actually, Mrs. Fiorina is wrong. The Hall-Rabushka legislation is intended to replace not the entire Internal Revenue Code but just Subtitle A, which lays out rules about how much tax is due on what income. ...

”The minute it’s passed, I’m going to call my dean and tell her to pay me only in goods,” said Michael J. Graetz, a tax professor at Columbia Law School. “Buy me a house, buy me some groceries every week, buy me meals.” That’s because the three-page plan avoids complex rules about fringe benefits by saying noncash compensation is tax-free. ...

So far, the candidate most committed to tax simplification may be Ben Carson, who advocated abolishing the deduction for charitable giving at Tuesday’s debate. Senators Ted Cruz and Rand Paul have also proposed simple tax plans that would not only shrink the personal income tax and repeal most deductions but also abolish payroll taxes and the corporate income tax, replacing them with a value-added tax, which is kind of like a national sales tax. ...

There is also one approach to simplification that hasn’t been proposed by any of the Republican candidates: having the I.R.S. complete most people’s tax returns for them, requiring changes only if there is an error. This is already done in countries like Denmark and Spain. Tax complexity isn’t about just how many rules there are, but also about how many of those rules taxpayers actually have to confront. Auto-completion of tax forms would reduce complexity (and time and cost) as experienced by real people.

Political News, Tax | Permalink


Reducing what people have to confront when paying their taxes is not a good thing. They need to understand what the government is taking from them.

Posted by: Karen Walby | Nov 17, 2015 1:10:08 PM