Tuesday, April 14, 2009

It's Not Just About the Money

"[A] statute which either forbids or requires the doing of an act in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application violates the first essential of due process of law." Justice George Sutherland, Connally v. General Construction Co., 269 U.S. 385 (1926).

The Cato Institute has put together an excellent video rundown of how ridiculously arcane and byzantine is the United States Federal Tax Code.



70,000 pages of tax codes and regulations (50% growth in just the last 10 years) with 600 different tax forms, costing America $300 Billion annually to "comply", amounting to the reality of a U.S. tax policy that cuts off the government's nose to spite America's face.

The need for serious, fundamental tax code reform and simplification is more pressing than ever. Of course, to expect any action would be to assume the present policymakers in this (or any) administration are any more serious about fairness and, frankly, legitimacy in federal taxation of the American people than were their predecessors.

The tax code's complexity is a behemoth malignant outgrowth of special interest servicing. Buried in it are all kinds of little quirks and weirdness that serve only very narrow ends or constituencies, never obvious or easily apparent to any eye not trained as an LLM in tax law (believe me, it takes not just a finance but also a legal genius to even begin to sort it all out).

The bottom line is that federal lawmakers appear quite fine with the levels of actual non-compliance and evasion, legal or otherwise, that are the natural result of their impossibly-massive tax regime. All its gobbledygook is the substance and sustenance of the D.C. fixers' macro and micro ability to engineer human economic activity to suit their political or ideological agendas...or those of their biggest campaign contributors.

The progenitors of this nightmare, fully in the Washington power seat now more than ever, will never ever give it up, especially not for such quaint notions as fundamental fairness, due process rights, or basic economic justice. It is far too useful a tool to their own ends, even if it means the treasury gets routinely cheated of revenue because even the average IRS agent can't fully comprehend the tax code. (Not that I am shedding any tears about this, mind you.)

No, we'll see no change under this president and congress. The current federal tax policymakers (most of whom have been making tax policy for decades running) are a reckless bunch who believe they can (and know they will) just borrow any shortfall from as-yet-unborn generations of American taxpayers.

It is all too easy for these ilk to mortgage the economic lifeblood of people who don't yet exist, either to the Chinese or whatever future suckers would buy U.S. treasuries further down the line of trillions in crushing debt already on paper.

For those who would boil the issue of taxation and its burdens down to inane questions (and speculative questions at that...given Barack Obama's penchant for moving the goal post as convenient) about "whether or not someone makes $250K or more", I simply say : get real and drop such simplistic nonsense.

Aside from the fundamentally childish, self-centered, class-warfare-ish premise behind such a question, namely that no one should care about whether particular groups of citizens ("who are not me") are being made special tax targets, the burden of taxation is not just federal and it is hardly just about how much money Americans eventually have to fork over.

The endemic fretting and figuring out what you rightfully owe is itself a crushing tax on any honest citizen's life and livelihood, especially those without the luxury to hire professionals to handle it for them. I wonder how many federal tax policymakers prepare their own taxes? (We know the answer with the head tax collector, our new U.S. Treasury Secretary.)

There are no refunds for the hours if not days of life thrown away (not to mention the anxiety) servicing this statutory and regulatory leviathan.

"TEA parties" may come and go, but the pernicious U.S. tax regime will persist until real change comes to pass.

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