Tax Simplification — Do the Middle States Really Want It?

I keep hearing about income tax “simplification.” It is almost as hot a topic as “social security reform.”

On the topic of income tax, some of the less up-to-date among us still throw out the term “flat tax” as something that our representatives should strive to achieve.

I can’t be certain of this gut feeling I’m having, but based on what little I have seen and read, it occurs to me that “tax simplification” is just another ploy by the rich to get the middle class to demand a change to benefit the rich.

Yes, I know…Middle America “thinks” that tax simplification means that they will pay lower taxes.

But let’s be clear in this debate. There is no design element to tax reform that requires the government to collect less taxes. The federal budget is NOT being reduced. In the aggregate, the government still needs us (all of us) to continue to contribute an ungodly amount of money each and every year.

What we are talking about is which groups (which people) bear what shares of that huge and ever growing bill.

So let’s work with high-school algebra here. The total amount to be collected must remain the same. Middle America thinks that they will pay less. So where will the money that used to be paid by Middle America come from? Remember, Middle America thinks that they will pay less under the new system.

Where will that money come from?

The rich?

Does everyone think that the rich will pay more under the new system than they already do?

Let me kill that perception right now.

The April, 2004 JEC Report entitled “WHO PAYS THE INCOME TAX?” asserts that: (i) the highest-earning 20% of taxpayers earn less than half of all income but pay more than four-fifths of all federal income taxes; and (ii) the highest-earning one percent bears an even more disproportionate share of the income tax burden, earning 14% of all income but paying 34% of federal income taxes, more than double their income share.

Based on this report (and this report is roughly the same as all of the other JEC reports on this topic), the rich (the top 20% of earners) are already paying a ridiculous percentage of the overall collected tax (more than 80%).

So, when the President mandates that the changes to the tax code should “promote long-run economic growth and job creation, and better encourage work effort, saving, and investment, so as to strengthen the competitiveness of the United States in the global marketplace” doesn’t this sound like the old Republican mantra “we need to give more money to the rich so that they can invest it in companies that provide more jobs for everyone else”?

I know I am being cynical here, but the President is not looking for a tax reform proposal that requires the rich to pay more.

Now, I am all in favor of a system that simplifies both compliance and enforcement. If we could actually support the folks that are charged with chasing the dead-beats, we would go a long way toward easing the burden of all of the rest of us voluntary compliers. And certainly, that is a key goal of the Tax Reform Panel. But until this last budget bill, the appropriations for Treasury were meager. Heck, a junior partner at a regional accounting firm or law firm can make twice as much as the highest paid IRS cop. Is it any wonder that the brightest tax minds leave government and go over to the “taxpayer” side?

So I propose this. Find a way to increase voluntary compliance with, and enforcement of, the existing laws AND / OR reduce the budget.

If it were up to me, I would leave the top 20% paying 80% of the tax and just reduce the budget.

The funny thing is…if we reduce the budget, then the government will have less of a need to keep dipping into social security.

Maybe we can fix both problems at once.

So I am not Blogging Again…..Why? Time?

Time? Probably.

I have really enjoyed the evaluation versions of Go Live and Photoshop. They resulted in Paula’s website. That ate up a lot of time. It still needs tweaks…but I don’t have time for that.

I have really enjoyed iPodderX.com. ….but NPR needs to put more out there than just On the Media. Of course, the whole point of “podding” is to find stuff that is not “syndicated” or “mainstream”. And that takes time, and I really don’t have the time.

I have really enjoyed Mambo. In a word…”Wow!”. I was able to do this in almost no time. Of course the graphics were compliments of Photoshop. I still need to tweak the color of the buttons…I really don’t like orange, but I don’t have time.

I was at a meeting with the senior staff of my department this morning and you know what? We all decided that the best thing to do is spend more time growing the business. Ironic, huh?

I wish I had time to Blog. There is so much to blog.

The split in the DC district court over the Guantanamo Detainees is a story crying out to be debated. But I don’t have time to explore the constitutional issues in enough detail to debate which of the learned judges is right and which is wrong. The indigo girls in their song Perfect World implore us to not float through life; not to look the other way. Those “enemy combatants” have been there a long time. I would really like to know if this is an indefinite life sentence. And does the punishment fit the crime? By the way, what is the crime? Of course, if I had the time to look I might find the reason I need to agree that they are really a danger to the US…. Honestly, I just don’t know. I haven’t had time to look. And that just sucks. Am I just floating through life? I must say, I do have a cushy life. Whine whine whine….

Speaking of not being there to bear witness to life, did I mention that it is the 60th anniversary of the liberation of Auschwitz? I will not provide a link as there are too many good ones….not that I have visited them yet….did I mention that I don’t have time? All that and I’m not even a history buff….or jewish.

Speaking of Jewish….I am wholly innocent of the background of Kristallnacht, the names Zindel Grynszpan and Ernst vom Rath. Is that a lucky thing for me? Or am I simply bereft of even the most basic of historical knowledge? I really do want to simply put the names into Google and press enter. How can I not have time for that?

And then there is Lawrence Summers. What did he really say? Does it matter any more? What should the debate be? Should the debate be limited to gender stereotyping? Should we be speaking about better mentoring? I am the father of a daughter. This should be a HUGE issue for me. But there it is again. I don’t seem to have the time to keep up.

Hell, if it wasn’t for RSS, I wouldn’t even know this stuff was out there.

I don’t even know how the Stanford Men’s basketball team is doing this season….and I have season tickets.

I don’t even think that I spend enough time on the floor playing with my daughter and her cars.

…so there it is…

I’ll keep looking….

Until later….

Paula’s New Website

I just finished the first draft of Paula’s new website.

The devil is, of course, in the details….and I have no idea what I am doing. Nonetheless, I am realively pleased with the initial results.

Yes Richard, IRS Agents Do Watch TV

I am shocked when normal people think that they can dodge the IRS and hide income. But this strains credibility. Richard Hatch made the money in question in front of 20 million or so viewers. How could he think that the IRS wouldn’t notice?

Charges / Plea Agreement

Testa Disbands

All I can say is WOW.

I know that Dick’s death was a blow. I also know that Robin and group did not like the direction in which the firm was heading. And we all miss Dean. But disbanding?!? WOW.

May their path forward be easier than Brobeck’s.