Matt Lewis at the Daily Caller brings us the joyous news of an innovative approach to tax simplification. No, not making the tax code simpler – that’s just crazy talk. This is all about making the government’s life easier:
Imagine this scenario: The IRS may soon just do your taxes for you — and send you the bill.
If this sounds farfetched, it’s not.
Actually, it sounds like the kind of offer Agent Smith would make to Mister Anderson, right before shoving a robot centipede into his stomach.
With a new congressional “super committee” tasked with finding $1.5 trillion in cuts by November, creative ways to find additional revenue are in high demand. And allowing the IRS to prepare you taxes could be one solution.
The idea has been around for a while, but has been picking up steam in recent years. In 2006, Senate Finance Committee Chairman Max Baucus (D-Mont.) argued it would close a $345 billion annual difference between what the government believes taxpayers owe them and what the IRS actually collects, which he calls the “tax gap.”
Baucus is one of the Democrats appointed to the deficit-cutting Super Committee, which was created to relieve us of the heavy burden of responsible representative government. Lewis goes on to note that both President Obama and his recently departed chief economic adviser, Austan Goolsbee, have spoken approvingly of the prefilled tax form idea. It could be an attractive way to knock out $345 billion of the deficit reduction his committee is tasked with achieving – not by cutting madcap government spending, but by increasing revenues.
How are these tax forms supposed to rake in so much money? Compliance with tax law costs a lot of money – $2 billion per year and over 200 million man-hours of work, by Barack Obama’s reckoning in a 2007 speech – but pre-completing the forms wouldn’t transfer all that money to the government. (It would wipe out a lot of tax preparer jobs, though. It’s one thing to envision such job loss as a result of dramatically simplified tax codes, but another to inflict those job losses as part of a scheme to feed more revenue to Big Government.)
The reason this idea is proposed as a revenue enhancer is the conviction that Americans are under-paying their taxes by $345 billion per year. The IRS would have an overpowering, built-in incentive to pre-fill those tax forms with as few deductions and credits as possible. To have a fighting chance of collecting those deductions and credits, taxpayers would need to keep the IRS updated on a great deal of personal information throughout the year.
A lot of people would be inclined to accept whatever figures the IRS comes up with. Arguing with them is not an appealing prospect, and it would require either investing a great deal of time, or spending money to hire professional assistance. It’s one thing to make those investments when you’re completing an annual duty and trying to get the best tax return you can, but quite another when making a possibly futile attempt to challenge one of the government’s most feared agencies.
Perhaps high-end taxpayers would still find it worth the effort… while taxpayers in the lower brackets, who often file the simplistic 1040EZ form, wouldn’t have to worry about it. That leaves the burden of this magical $345 billion “under-tax” harvest falling squarely on the middle class.
This is also a bad idea because its “convenience” removes people even further from the taxation process, and it is already far too remote. Much of your tax burden is surgically removed from your paycheck before you ever see it. Some of it has been disguised as mandatory “contributions” from your employer. Corporate taxes are rolled invisibly into your purchases. Americans are not well-served by efforts to hide the immense cost of a government that nevertheless cannot live within its means. Paying taxes should not be painless.