Why Are Taxes So Complicated?

tax

Why are taxes so complicated? Really, I should ask, “Why, when considering income tax, is the act of determining what you owe or what your refund will be, need to be so difficult?”

I realize that the process is complex and there is no easy way to determine each taxpayer’s liability, but WHY?

Why not a flat tax?

Why do so many people have, as their profession, filling out tax forms for other people?

I have a good friend who works for H&R Block. I have a son who is a tax accountant. How did taxes become a profession?

OK, I’ve asked a lot of questions and you are probably wondering where I am going with this. Am I upset because I have just finished filing my tax returns for 2008? No and Yes!

You see, this whole tax thing, from my point of view, should be handled at the “point of liability.” What I mean, is we should pay tax due at the time we do something that is taxable. For example, when I purchase a product from a grocery store, I pay not only the purchase price but also the sales tax on the price of the purchase. Another example is when I receive a check from my employer, the income tax is subtracted from salary and I receive what’s left. I know what you are most likely thinking at this point — “maybe too much or not enough is subtracted.” Well, that’s the problem. Why can’t the right amount be subtracted? Why, because maybe my tax liability will change before the end of the year. MAYBE, that’s the problem. Why should it change? The only reason I can think of is, that’s the way the tax law is written. WELL????

As you can probably tell by now, I’m seriously interested in a Heritage Foundation type of flat tax. Maybe even something more simple. No surprises. No refund or tax due on April 15. Just like sales tax, pay at the point of liability – PERIOD!

In his 1776 The Wealth of Nations, Adam Smith noted that “subjecting the people to the frequent visits and the odious examination of the tax gatherers … may expose them to much unnecessary trouble, vexation, and oppression: and though vexation is not, strictly speaking, expence, it is certainly equivalent to expence at which every man would be willing to redeem himself from it.”

Wouldn’t a flat tax enable us to be redeemed from the vexation or expense?

Here are some “tax” quotes to ponder on.

From: Benjamin Franklin, Poor Richard’s Almanac
It would be a hard government that should tax its people one-tenth part of their income.

From: Albert Einstein
[on filing for tax returns] This is too difficult for a mathematician. It takes a philosopher.

From: Will Rogers
The income tax has made more liars out of the American people than golf has.

From: Plato
When there is an income tax, the just man will pay more and the unjust less on the same amount of income.

From: G. Guttman

If the IRS took 100 taxpayers at random and sent each an incorrect notice that they owed an extra $92.35 in taxes and interest, more than two-thirds would probably just send in a check without investigating further.