How Confusing is the Tax Code? Even the IRS Chief Gets Help

When the head of the IRS needs someone else to do his taxes, you know we have a problem.

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By Mary Kate Cary, Thomas Jefferson Street blog

Tax Day revisited: I wrote on Tax Day about the miseries of paying one’s taxes, and bemoaned the fact that paying for professional help on taxes has become a new government unfunded mandate.

This morning, going through a recent issue of the Economist, I came across some more evidence in what lawyers would call the “parade of horribles” concerning our taxes:

The federal tax code, which was 400 pages long in 1913, has swollen to about 70,000. Americans now spend 7.6 billion hours a year grappling with an incomprehensible tangle of deductions, loopholes and arcane reporting requirements. That is the equivalent of 3.8 million skilled workers toiling full-time, year-round, just to handle the paperwork. By this measure, the tax-compliance industry is six times larger than car-making.

An incredible 82 percent of taxpayers are so flummoxed that they pay for help. Some 60 percent hire an accountant or tax preparer, while another 22 percent use tax software.

The Economist points out that “even the head of the Internal Revenue Service, Douglas Shulman, gets someone else to do his taxes.” I don’t know how the Economist reporters know that, but if that’s true it’s exhibit A in why we need tax reform.

Here’s exhibit B: The Annual Report of the National Taxpayer Advocate, who works on taxpayers’ behalf at the IRS, says that the most serious problem for taxpayers is that the IRS only answers their toll-free phones 71 percent of the time. I don’t think that’s the most serious problem when it comes to paying taxes.

I wish more people would speak up about the burden taxes place on most families, not just in terms of money paid, but in terms of time spent and risk assumed. And I wish more people would speak up about it year round, not just on April 15.

It doesn’t have to be this way. Our tax system has become a drain on our economy, a burden on productivity, and a nightmare for most families.