Here’s a wild idea: what if Congressmen and women weren’t allowed to hire accountants or lawyers, use software or go to H&R Block to fill out their tax returns? What if, like that brave 10 percent who do their taxes themselves, Congress had to sit down and do their taxes on their own?
Their first time would be atrocious: wading through hundreds of pages of tax code, endless provisions, starting their forms out from scratch when they got something wrong. All this with the fear of making a mistake and getting audited, with nobody to blame but themselves.
It would be glorious: our legislators would be forced to acknowledge how monstrous the tax system is. America is one of the most anti-tax nations in the world – the country itself was started by a tax protest, after all. Yet nowhere else is filing taxes a painful annual experience. Every year, Americans spend on average 8 to 12 hours and between $110-210 figuring out their tax returns. Never mind how much Americans may pay in taxes, no other country spends so much time and money on doing its taxes.
In Britain, for example, income tax is taken out of your paycheck as it is in America, but it’s only if you’re self-employed, make more than £100,000 annually (roughly $130,000 per year) or think the government might have made a mistake in what it’s already taken that you have file what they call a ‘self-assessment.’ In America, the theory is ostensibly one of individualism – that each person is better off figuring out what the rules say they ought to pay on their own, and that individuals are best able to wade through all the exemptions and deductions to make the most of their financial situation.
That’s the theory, but it’s clearly not the case. Most Americans avoid looking into their taxes like the plague: according to one consumer finance survey almost 40 percent of tax filers use a tax preparation tool like TurboTax and 38 percent hire an accountant to do their taxes for them.
I can’t imagine the Founding Fathers wanted the US government to be so complex its citizens couldn’t figure out its rules on their own. We’re already pathetically addicted to hiring lawyers to handle any legal process, and we’re starting to see ‘benefits management companies’ like CVS become indispensable in handling insurance rules. These industries sell themselves as helpers. They’re actually expensive parasites.
Ditto the tax business. When an entire industry of accountants, software companies and other advisors has grown up around our annual filing process, it means the tax code is out of control.
Most Americans agree. According to Pew, complexity is the third biggest complaint Americans have about their taxes: taxpayers are more worried about how complicated taxes are than how much they themselves pay. 72 percent of survey respondents said the complexity of the system bothered them ‘a lot’ or ‘some.’ (Not surprisingly, the other top complaints were that corporations and the wealthy don’t pay their fair share.)
Some politicians know this is a problem. Paul Ryan promised we’d be able to file our returns on the back of a postcard if President Trump’s tax reforms were adopted. I didn’t see any postcards at the post office.
There’s just one group, other than Congress, that would suffer from simplifying the tax filing system: the multi-billion dollar tax preparation industry itself. For years, it has lobbied Congress to keep things as they are and make sure that no matter what the tax code says and who it favors, everyone still has to file their tax returns. Maybe the folks at TurboTax should also be forced to file manually, officially to avoid a conflict of interest with their employer and competitors, but really just to make them suffer.
Schadenfreude is unhealthy, no doubt – but I bet my idea would help streamline our most hated national pastime.