With taxes safely in the rearview mirror - well, for most of us - it is worth taking a few minutes to ponder the "wonder" that is our tax system.
Consider the accompanying graphic: There are approximately 9.1 million words in the 2005 the tax code and regulations, that's 9.1 with nine zeros. To put things in perspective, the Bible is a measly 773,000 words. Using sheer numbers as a metric, that means the Bible is 1,007 percent less important. At 1,300 words, the Declaration of Independence is 293,448 percent less important.
What a mess.
Many get misty-eyed over the tax simplifications of the 1986 Tax Reform. And while this did reduce the number of tax brackets from, seemingly, hundreds to three, it did little to simplify the labyrinth of arcane legalese. All it did was reshuffle the deck.
Between 1985 and 1995, the U.S. Tax Code grew another 30 percent. The 10-year period 1995-2005 saw the slowest growth in additional words since 1975, only 1.45 million were added.
At what cost? It is estimated that Americans spend a collective 6.6 billion - billion - hours doing taxes. There are only 61,320 hours in a year. No wonder time flies. Before you know it, your kids are in college, and you start thinking knee-high black socks, white patent leather shoes and Bermuda shorts are a good look.
According to the Bureau of Economic Analysis, the federal government took in $2.54 trillion in receipts in 2008. Tax-complying costs are estimated at about 20 cents on the dollar. Are you telling me we spent $508 billion to comply with the tax code? If compliance was a country, it would be about the 17th richest in the world - right after Turkey.
Now, before we get upset at the Internal Revenue Service, let's remember it's just doing its job. No one really likes what it does, but it is really just tax police. And as bashing Congress is becoming an increasingly popular blood sport, let's cut to the chase.
It boils down to how taxes change behavior. We can deduct a bevy of expenditures, and while many of these have some merit, economists have several qualms with the current system.
Most egregious is that many of the taxes, while seemingly beneficial for those who receive them, really benefit special interests in any given industry or group.
Is it any mystery that mortgage and builder industries were active in lobbying for mortgage-interest deductions? These relatively small groups extract economic "rent" from government policy. This, of course, leads to corruption, moral hazard and a host of other unsavory things.
Second, economists who believe in the market (this is not a right or left issue) don't like any policy that distorts prices and changes the mix of goods households buy. Taxes do just that. Mortgage-interest breaks give households an incentive to take on bigger mortgages.
So what to do? There are a host of alternative types of taxes around. All require the total destruction of the current Tax Code. Ideas currently in circulation are the flat tax, consumption taxes and transaction taxes. These can be progressive, don't tax necessities and can tax that styling Gucci handbag at 80 percent.
In a sentence: To raise revenues, let's broaden the tax base and lower tax rates. Imagine filling out your 1040 on a 3-inch by 5-inch card and sending a check.
If we remove all deductions and loopholes, we disable tax lawyers' chances to flex their legal muscles. Wouldn't it simplify life if you could pay your fair share of taxes and not lawyers? Oh, about 45 percent of Congress and the president have law degrees.
But, before I ponder this further, I have taxes to do: state income, county real estate, sales, gas, cigarette, sin, estate, capital gains, payroll ... I guess Congress is safe for another year.
email@example.comRobert "Tino" Sonora is an assistant professor of economics and co-director of the Office of Economic Analysis and Business Research at Fort Lewis College.