January 14, 2025
These days, there are few things that Americans agree on. If there is one that has broad agreement, it is that we feel pretty much the same about taxes. Nobody likes paying taxes, although people do it with the understanding that it is necessary for the nation to survive.
Taxation has been around about as long as civilizations have existed. We know that taxation existed in Mesopotamia more than 4,500 years ago. And taxes here in the U.S. go all the way back to the colonies, when Great Britain taxed about everything that existed. The colonists objected, eventually creating the now well-known phrase "no taxation without representation." But the English king ignored them and this led to protests, the best known of them being the Boston Tea Party.
Even after the revolution and the creation of the United States of America taxes have been an important part of the lives of Americans.
While understanding that they are necessary, there always has been much controversy about the system of taxation. One major issue is the length and complexity of the current tax code.
The tax code’s growth over the last century or so is hard to swallow. In 1913 the tax code was a relatively tiny 400 pages. Today, it is about 6,000 pages. But when you add in the IRS guidelines, with its nearly 10,000 sections it is 75,000 pages of regulations, instructions and guidance. Someone estimated that in order to read the entire code, it would take nine days of 24-hour reading.
As explained by eFile.com, the code includes “categories for employment taxes, financing of election campaigns, coal industry health benefits, and the trust fund code. This incredible growth can be attributed to both expansions and revisions that are made to patch up tax loopholes. Over the past 10 years, it is estimated that the tax code has been amended or revised over 4,000 times.”
In the not so distant past, several changes were made to the tax code. President Ronald Reagan made two reforms, in 1981 and 1986, including the largest tax cut in our history, at the time. President Bill Clinton lowered taxes on the middle class in the 1990s, and President George W. Bush also cut taxes substantially in 2001.
President Donald Trump put forth the Tax Cuts and Jobs Act in 2017, which helped people with lower incomes and it also lowered the corporate tax rate. His efforts are regarded as the largest overhaul of taxes in the 30 years prior to its passage.
Even so, these actions did not actually make the tax code any shorter or easier to understand and deal with.
Our tax code is so large and complex that the Tax Foundation estimates that 6.5 billion hours are needed each year to get all the tax work done. That works out to the equivalent of 3.1 million full-time workers. And the wages of these folks total $313 billion. In addition, there are 83,190 people working as tax preparers, as estimated by the Bureau of Labor Statistics.
And then there is the issue of tax rates. If there is to be a tax on personal income, why should there be different tax rates depending upon how much you make? The old saw that “the rich ought to pay more” works with everyone paying the same rate. At 10 percent of wages, earnings of $30,000 = $3,000; $75,000 = $7,500; $500,000 = $50,000; $1,000,000 = $100,000.
Why do higher income earners have to pay a higher tax rate? When wealthier people pay higher tax rates, they have less money to spend on the things they need and want, like homes and things in them, autos and other personal items, investments, donations to charity, etc.
Lower rates give them more money to spend. Having more of their money in the economy is a very good thing. It increases sales of items and services, and that creates jobs and prosperity. Lower tax rates also reduce or eliminate the need for tax loopholes.
People with incomes at or below a certain point cannot afford to pay taxes on their income, so they should continue to get a break. And those in the income area just above that point might need a lower tax rate than others. But we shouldn’t need more than two rates.
Taxes must be sufficient to pay for the actions of government. But the actions of government must for this and other reasons be only as expensive as is absolutely necessary to provide for the safety and well-being of the people. A smaller, more efficient government would require less income from taxation to pay the bills.
The tax code should not be thousands of pages long. And it should not be so complicated that the average American cannot understand it and comply with it without having to seek help from professionals.
Increasing government efficiency at the same time as we are reducing excessive regulations, eliminating unnecessary or unconstitutional departments and agencies, and establishing sensible and fair income tax rates is long overdue.
Hopefully, the incoming Trump administration will address these problems and take steps to fix them.