TAX REFORM: UNLIKELY

Politicians have been discussing tax reform for at least 20 years. The public enjoys hearing about proposed tax cuts or simplifications. We hear about the simplicity and equity of a flat tax. Currently running for president are those that advocate for doing away with the IRS. Everything seems OK, yet nothing ever seems to shift. Thus, why doesn’t it? I’ll give you an example to start. California experimented in 2005 with a ready-return tax return, which resembled a credit card statement. Since the state already had all of your W2s, the information was prefilled and submitted to the taxpayer for approval or disagreement. 96% of users said they were happy with it. It reduced stress, costs, and time. Strong resistance arose to halt it when it was enlarged to see whether it could be accomplished. Because it would hurt the profits of businesses that sold software to make California’s existing and inefficient tax system more efficient, leaders in the California legislature blocked a broad-based rollout of this immensely popular improvement in the efficiency of the California tax system (republic lost, Lawrence Lessig). Put another way, a large number of people oppose changing our convoluted and unjust tax structure. You have to understand one simple point: its complexity is a feature, not a bug. When simplicity is pushed, complexity pushes back harder. This is how Lawrence Lessig put it when explaining the nature of American tax law. The affluent and our politicians’ power struggle is another obstacle to tax reform. Numerous short-term tax incentives are introduced, extended, and developed to help certain firms. These are referred to as sunsets. A new legislation that is authorized to benefit a particular firm (often just one) is typically enacted for a period of two years. These laws must be updated every two years, otherwise the organization will no longer enjoy the benefit. This offers our politicians the power to guarantee that they will keep getting substantial campaign donations. The problem is Congress’s learning how to threaten the richest in our society with higher taxes in order to get them to give the endless campaign cash Congress needs, Lawrence Lessig went on. Having a single tax rate for all would not give any individual a unique incentive to send a check to their congressman. In summary, the tax system’s complexity and inefficiency allow for the maintenance of power and wealth accumulation for a large number of influential individuals and institutions. For this reason, unless my two imperatives—that is, the need for cooperation between Republicans and Democrats and the reduction or neutralization of the impact of large money—are fulfilled, the system cannot change. simply one more argument for the necessity for an independent to be the next president. If we don’t, don’t expect to see many changes to the tax system—especially not a significant revamp. Please visit our website at http://www.brianreckforpresident.com for further information on tax reform.