25 years ago when I first graduated from business school it was a point of pride for me to do my own taxes. My taxes were pretty straight forward and I had the naïve belief that every American should be able to do their own taxes.
That lasted about 10 years and as I got busier with work, kids and a house and as my frustration level grew at the ridiculousness of the tax code my wife convinced me to hire someone. When I was doing them it was crazy there would be 2 or 3 weekends in March and April when I would just be unpleasant to be around and she didn’t want that anymore.
That lasted until last year. I looked at our bill for tax preparation and said “$3,000! For what!?!?!” I was thinking this is just crazy. We do everything to keep our taxes simple. One problem is in spite of an MBA in Finance and Accounting, I am intimidated by the IRS. When I file there is always a nagging voice in my head saying “are you SURE that you did that right?!?!?” When I see an envelope with the IRS as a return address I break out in a cold sweat. Yes, my name is Dave and I am afraid of my own government.
So, I decided to do something about it. After doing my taxes last year and feeling uncomfortable, I signed up for a Tax Law class to get more comfortable for this year. So, for 15 Tuesdays from 4 – 6:20 I am studying Tax Law.
In anticipation of the first class I went out to get my textbooks. The Tax Case book is 1400 pages of the smallest most dense type that you want to see (hey, I have 52 year old eyes – these things matter). Then I go buy the actual IRS tax code – 5,000 pages of even smaller denser type. Ugh.
And then the absurdity begins. On page 2 of the case book I read “Three tax policy evaluation standards traditionally have been employed in choosing among and implementing possible objectives for a tax system (and the objectives are not mutually exclusive): equity, efficiency and simplicity.”
Equity, efficiency and simplicity! If only that were true. That is the one sane thing that I have heard in this class and it isn’t even true. I have now been down the rabbit hole for 5 weeks and every week when I come home from class my wife asks how it was. My only response is that it is ridiculous and infuriating that we have developed a system that is so complicated that no one can be expected to be able to do their own taxes without the help of a computer. I think of someone with a high school education making $40,000 who doesn’t have a chance of understanding what they are doing. I think of my sister, a college graduate who would probably be considered lower middle class. Most of the code is geared towards helping people like her but even though she is smart, there is no way she is going to be able to do her taxes correctly and take advantage of the code with out help. And that just isn’t right. Every Citizen should be able to do their own taxes yet only 10 percent do. (National Taxpayer Advocate estimates that 60% of filers hire someone and 30% use software). That isn’t right.
As technology has progressed to make it simpler for the average citizen to do their taxes (you’ve all seen the commercials for TurboTax, TaxAct or H&R Block), our tax system has become a black box that nobody understands. Congress is constantly tweaking the system to try and get us to do what they want us to do. (Try googling – “how many tax changes for 2013” and you will get 657,000,000 results – yes that’s 657 million.)
But if no one understands what is happening in the box how can we modify our behavior the way that Congress wants us to? We can’t. What I have discovered is congress is writing headlines with one hand and taking them away with the other. The headline is “get tax credit for…” but when you peel back the layers you find out that you don’t qualify because you make too much money, or you don’t spend enough on child care, or you aren’t in the hurricane Katrina zone or you aren’t an American Indian. Yes, all these things happen.
I have decided that in order to survive this class and as a cathartic action I need to get these absurdities out of my system. So, everyday for the next year I am going to write about one absurd fact of the IRS Code. It may be a quick fact that I find crazy or it may be more detailed like how you calculate the Social Security Exclusion. If you are interested, you can follow my pain at my personal blog:
and maybe occasionally I will update you all here at “The Update”.
Wish me luck. And good luck with your taxes this year.