Taxes and the Slow War on Law-Abiding Citizens

I finished my taxes last week. By “finished,” I mean I completed the steps on the H&R Block website and accurately checked boxes and filled inputs to the best of my ability based on my understanding of the terms presented. But it sure is complicated, especially now that there’s a house involved; good thing vehicle property taxes don’t start for us until next year.

But it’s not just getting worse for me as I get older; it’s getting worse for everyone. This graphic about the length of federal tax law was going around the Internet the other day:

Federal Tax Law PagesThat’s a stunning growth rate (even with the inconsistent Y-axis), and every year around this time we hear calls for tax reform. Fareed Zakaria had a good post on CNN the other day:

Most Americans – Republicans and Democrats – dislike the tax code. They’re right to do so. America has what is arguably the world’s most complex tax code. The federal code plus IRS rulings is now 70,000 pages long. The code itself is 16,000 pages. The statist French, for example, have a tax code of only 1,909 pages – only 12% as long as ours. And then there are countries like Russia, the Czech Republic, Estonia that have innovated and moved to a flat tax, with considerable success.

You have to understand, complexity equals corruption… Congress is able to funnel vast sums of money in perpetuity to its favored funders through the tax code without anyone realizing it…

Zakaria goes on to argue for simplifying the income tax and replacing much of it with the Value-Added Tax (VAT) that is all the rage in Europe. The VAT is essentially a national sales tax, and Zakaria makes a good case for it. I’ve always been wary of it because, come on, it’s another tax, and European countries have a bad history of increasing their VATs to try to squeeze more money into their hungry coffers. It also might incentivize people to move to the black market.

But it certainly looks attractive next to our bloated income tax regulations that are stuffed full of complicated deductions and credits supposedly designed to encourage certain behaviors but maybe just end up rewarding various tax lobbying industries. (I was surprised Zakaria didn’t mention the most common criticism that consumption taxes unfairly hurt the poor, because there’s a fairly easy rebuttal: one way or another, you exempt the lowest incomes and/or most crucial categories from it.)

But the corruption of our tax code is not limited to the special interests. As this monster grows at a rate of 1,000 pages per year, with it grows the chance that honest citizens will commit errors on their taxes because they can’t keep up with the law.

This is part of a federal problem that extends well beyond tax law. For example, there used to only be three federal crimes, and now there are so many thousands that they are literally uncountable because they are so complicated, overlapping, and ever-changing that it’s impossible for someone to completely understand and enumerate them.

As the federal government makes more and more things illegal, and makes the rules about those things more and more complicated, more and more “law-abiding” citizens accidentally become law-breakers. We may soon reach a point, if we are not there already, where every American is unavoidably guilty of breaking at least one federal law or another.

This overcriminalization has many consequences. It undermines the rule of law and encourages people to question the value of obeying this unsatisfiable authority. It makes the government hungry for more resources to enforce more laws. But worst of all, it allows corrupt officials to engage in arbitrary enforcement that ignores their political friends and attacks their political enemies.

If everyone is technically a “law-breaker,” then you are only free so long as the government chooses not to bother you – or so long as you manage not to bother them and give them a reason to find a law that you’ve broken. We need to be able to challenge our government without fear of retribution.

I’ve written before about our government’s Wars on Drugs, Terrorism, and Piracy. Is it too hyperbolic to say that it almost looks like there’s also a War on Taxpayers? It will probably just keep getting worse until we reform it, so I want to join the throng of those calling for reform. I heartily agree with Zakaria’s closing line:

I am in favor of almost any new tax code that fulfils one requirement: It should fit on two pages.

3 thoughts on “Taxes and the Slow War on Law-Abiding Citizens”

  1. Many European countries have been able to raise their VATs to such high levels because they also make it a crime to print the VAT on receipts. The consumer sees a higher price, but isn’t reminded at every purchase how much of the price goes to the VAT.

    On the other hand, Canada introduced a 7% VAT they call the GST in the 90s which is visible on receipts, and after they got their budget under control, they actually reduced it to 5%.

    1. Thanks, I haven’t learned a whole lot about the VAT (kind of hoping I don’t have to, heh…). That information confirms my general belief that we need increased transparency and information about government to help keep it in line.

Comments are closed.