The upshot of Ms. Olson's article is that we have met the enemy of tax reform. And it is us. Because we average Americans greedily cling to our "special interest" deductions such as mortgage interest and medical expenses. She opines we must be willing to give up these deductions in exchange for "comprehensive simplification"of the tax code. The underlying presumption is that the complexity of the tax code causes "high" tax rates and simplification will cause our taxes to go down.
This is of course total nonsense. And it is embarrassing (but not surprising) to read it in a massive marketing organization's (that's what AARP is) newspaper. Here's why:
- The problem is not complexity. That may have been the case before computers were invented. They can handle it now. Complexity is simply a symptom of the real problem. The most powerful interests keep slipping abusive provisions into the tax code, which our few remaining ethical lawmakers then attempt to fix. Which lobbyists then try to undo. And so on. This vicious cycle is responsible for the malignant growth of the tax code. Ms. Olson cites required minimum distribution rules and Social Security taxation as examples of how tax complexity baffles seniors. But just about anyone can figure them out.
- The problem is inequity, that is, those who benefit most from government expenditures contribute the least to the Treasury, measured as a percent of their income. No, I'm not talking about welfare cheats or those naughty seniors who keep whining for their meds so they can stay alive.
- The cheaters, the "winners" in the tax game are:
a. Those wealthy individuals who are hiding $11.5 trillion off shore, strictly to avoid Federal, State and local taxes. See http://www.taxjustice.net/cms/front_content.php?idcat=2
b. Corporations are more difficult to assess. Nobody seems to know the exact total trillions offshored by them. It seems reasonable to guess that the total of individual and corporate tax dodging exceeds the entire GDP of the United States.