Search This Blog

Loading...

Wednesday, April 14, 2010

Time to Demand a Simpler Income Tax System

As we complete our income tax returns this week (unless you got it done earlier), we are reminded of the complexity of the process. This year, some people claiming a standard deduction have a new form because of the additional deductions Congress has added to the standard deduction (see Schedule L) - the standard deduction is not supposed to require a form! And millions have a new Schedule M to fill out to reconcile their Making Work Pay Credit and/or Government Retiree Payment (Schedule M + instructions).

I've got an op ed in The Press-Enterprise today (April 14) on the reality that the federal income tax will only get simpler if we honestly demand it of lawmakers. They have no incentive to do it on their own. I think the public has come to expect and perhaps admire politicians with campaign promises of new tax breaks. Such breaks just complicate the system and usually are not needed. A lower rate without the special tax breaks would be a lot easier and save us a lot of time and money preparing returns and keeping records.

It's a short op ed - "Demand a simpler income-tax process" - I hope you'll read it and leave a comment here. Thanks.

1 comment:

Mary O'Keeffe said...

I heartily agree with your call for a simpler tax system, but it is premature to say that the IRS has much of the information taxpayers enter on their 1040s.

Under the current system, employers do not send W-2 information to the government until well after employees receive their copies. That allows for employees to correct that information, if necessary, before the employer sends it on to the government. Deadlines for employers to file W-2 information with the government are Feb 28 (on paper) or March 31 (via efile). And even then, the information goes to the Social Security Administration, which does a considerable amount of data cleanup before forwarding it to the IRS.

Unfortunately, misuse of Social Security numbers means that a considerable amount of the W-2 information that the government currently receives is just plain wrong.

We could certainly design a better system, but the current information flow process would not allow the IRS to prepare tax returns for taxpayers on a timely schedule.