Death may be certain; federal taxes are not (Cameron Smith)

Cameron Smith By Cameron Smith
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on April 16, 2014 at 8:07 AM, updated April 16, 2014 at 8:12 AM

In a letter to Jean-Baptiste Leroy written in 1789, Benjamin Franklin famously stated, "In this world nothing can be said to be certain, except death and taxes." As state and federal taxes come due this week, some of us are likely debating whether death is preferable to completing and submitting tax returns that are anything but certain.

Plenty of pundits will argue whether we pay enough taxes, whether we tax the right people, and whether the tax revenue is used wisely. While some people would like to pay more taxes to enable the government to provide more services and programs, many of us would rather pay for what we want instead of being taxed to pay for what we do not. 

Debates over taxation will never disappear, and agreement is tough to find, especially across the partisan divide. However, one issue should resonate with all Americans: Everyone should be able to understand what they owe and be able to pay it without an advanced degree or a professional tax preparer.

The current complexity of the federal tax code is mind-numbing. Even after haphazardly sifting through the myriad of deductions and special credits, calculating the tax owed looks suspiciously like the mother of all word problems. 

For a taxpayer with qualified dividends and capital gain taxes, there are 27 steps to determine the tax on all taxable income entered into line 44 on IRS Form 1040. This is not a problem limited to the wealthy; it happens to anyone trying to grow their savings, no matter how meager. To make matters even more complicated, many taxpayers must calculate their taxes twice to make sure they are not captured by the Alternative Minimum Tax. 

The Internal Revenue Code has long passed being the means for funding the government; it in now a tool for political social engineering. America's political class will let you keep more of your money if you behave in ways they deem appropriate. 

Think about it. What does the refundable insurance premium tax credit under the Patient Protection and Affordable Care Act have to do with funding the government? Does creating a deduction for "reasonable and necessary whaling expenses" paid by whaling captains recognized by the Alaska Eskimo Whaling Commission address a government financial need? Taxpayers may deduct gifts to maintain a public park or to support a synagogue, but they may not deduct donations to a communist organization, country club, or homeowner's association. 

Regardless of whether citizens like or dislike various tax provisions, there is no denying that many of them are arbitrary and completely unrelated to funding government. Most Americans could benefit from lower marginal rates in exchange for fewer directed tax breaks. Doing so would change the way the federal government taxes without simultaneously fighting the battle over raising or lowering tax revenues.

Thankfully, a few Democrats and Republicans politicians understand the need for a better tax process. Two of them, Senate Finance Chairman Ron Wyden (D-OR) and Senator Dan Coats (R-IN), have authored a bipartisan starting point called the Bipartisan Tax Fairness and Simplification Act which retains many commonly used deductions for individuals and families while removing other direct and indirect special interest tax subsidies. 

While the Wyden-Coats plan might not be the final word in tax simplification, our political leaders must start somewhere. Average Americans and growing small businesses have families to support and jobs to create; they do not have time to wander through the tax code hoping their annual filing is correct. Certainly, they could better use the resources spent on a tax preparer.

Although Franklin was right about death being certain, America has a lot of work to do before we can say the same about our taxes.
