Passage of the Day: Chris Edwards of Cato on Our Awful Income Tax System
Just because the 2003 tax cuts worked doesn’t mean that the tax system itself is okay. It isn’t.
Mr. Edwards says the GOP is to blame for the law’s complexity, and he is basically correct:
Looking for someone to blame? Try the Republican majority in Congress.
After winning control of Congress in 1994, Senate Majority Leader Bob Dole, R-Kan., and Speaker Newt Gingrich, R-Ga., called for fundamental tax reform, saying the tax code was “overly complex” and “indefensible.” Virtually every GOP leader since then has echoed the call for reform, without ever coming close to delivering.
Since the mid-1990s, the number of pages of federal tax rules has soared by 64 percent, the hours Americans collectively spend complying with the tax code each year has surpassed 6 billion, and the annual cost of complying has more than doubled to $265 billion.
The only winners: tax lawyers and accountants. H&R Block has tripled its revenue since 1996 as the share of taxpayers needing professional expertise has grown. Middle-class households are struggling through the thicket of tax rules related to children, home ownership and retirement plans, while even low-income families need outside help to figure out all the special tax benefits that apply to them.
The tax code was at its simplest in 1986, after the Reagan tax cuts and the simplification efforts that followed. It has been horribly downhill ever since, and as noted by Edwards, the deterioration accelerated in the mid-1990s with the college “tax breaks” (which only succeeded in enabling colleges to continue to raise prices at twice the rate of inflation) and other needless complexities. It was all so unnecessary, when across-the-board cuts would have made more sense for everyone.
