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Ridiculous U.S. tax system goes from bad to worse

Published February 6, 2007


In an age of political and business scandals, let's never overlook one of the biggest offenders - the U.S. income-tax system.

It's a scam, a sham and a flim-flam. It's a spit in the eye of the fundamental principle that the powers-that-be in a democratic society ought to deal directly and honestly with the people at all times. And the evils of the tax system are significantly worse now than they were even a few years ago and they are scheduled to get worse.

J.K. Lasser's Your Income Tax 2007 runs to 848 densely packed pages, 6 percent fatter than the 2002 volume. It's easy to mistake it for an old-fashioned telephone book - and just as forbidding to imagine perusing from front to back.

The cost to all of us runs in the hundreds of billions of dollars every year - at minimum.

The deterioration from year to year is qualitative as well as quantitative. Consider deductions, for example. Not so long ago, the problem with deductions was making hair-splitting distinctions about which interest payments or on-the-job expenses were deductible.

Now the game isn't just to identify what's deductible, but to separate above-the-line from below-the-line deductions, neither to be confused with credits. Then you must figure out what percentage of any given deduction, if any, a bunch of other variables on your tax return may actually permit you to deduct.

"Taxation is complicated and complex," says a press release from Thomson Tax & Accounting. "For instance, a wide variety of expenditures are commonly referred to as tax deductible. Yet this does not mean that all taxpayers can deduct them.

"Some items are deductible only if you do not claim the standard deduction; some are not deductible - or are less than fully deductible - if your income exceeds dollar thresholds; and some are deductible only to the extent they exceed a specific percentage of your income. In fact, some deductible expenses must pass through all three hoops before you can calculate how much tax savings they will actually produce for you."

No need for jokes about this system. It parodies itself.

Through decades of efforts at reform, there has developed a widespread sense of resignation that nothing much can be done. Life is complicated, the shoulder-shruggers say, and the tax system has to be complicated too.

A still-uglier subtext: In order to produce the revenue that is needed, the system must be confusing enough to keep the great mass of taxpayers off-balance and in the dark. If the system is honest enough to permit them to see clearly what is being asked of them, they will never agree to it.

Baloney. What's really lacking is a political constituency for change. While everybody would stand to benefit, it's hard to see how. The right kind of strong, energetic leadership would be a big help.

[Last modified February 5, 2007, 22:55:10]

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