Friday, April 15, 2005

Happy Tax Day!!

As a country, we apparently spend 6.6 billion hours on doing our taxes and responding to the tax code. So let me do the math here... that's about 22-23 hours for every man woman and child in this country. Does no one else see anything wrong with this fact? Half of a work week is spend each year by a person to simply respond properly to bureaucracy. Why don't people object to this fact?

Much of preparing for taxes comes from all of this documenting you have to do for the government. This was the first year where I really had stock sales to mention, but instead of just get some total figures from my brokerage company, I had to enter in each stock sale by hand. That process ended up taking about six to seven hours alone, despite the fact that I was using TurboTax.

Then there are the deductions where we run into the most problems with the tax codes. Because the government does not want to look too big and actually spend money directly, it masks its size by giving away tax money for things it deems desirable. K Street in Washington has become this lobbying Mecca in large part due to all of the myriad deductions it pushes congressmen to enact. Others may accept this reality, but it is just such a blatant waste of our money and time, that I think we need to change things.

We need to either go to a value-added-tax like they have in most European countries or we need to have a purely simple income-tax code. (Basically in the VAT, each stage of production has to pay a tax on inputs, this eventually gets filtered down to the final sales price.) If we are going to have a simple income-tax code, I would reduce the deductions to the following:

1. Charitable giving.
2. Business expenses.
3. Education expenses.

No more deductions of local taxes (why should the rest of the country finance spending down on behalf of your local community) and no more deductions on mortgages. Everything should be simple. Alas, I doubt things will ever change. Interestingly enough, the IRS claims that using tax-preparation software shaves about 70-80% of the time that it takes out to fill out those forms, yet people balk at either using the free services at home or paying the forty bucks for the full software. Go figure...

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