The Politics Of Taxes

As the deadline for our taxes quickly approaches, countless articles have recently been written about our archaic tax code and the politics that shape our economy. The latest issue of Business Week somehow managed to make taxes an engaging subject. Joel Stein, in an attempt to figure out the best tax preparation method, points out the ridiculousness in having to prepare our taxes ourselves.

"I don’t resent taxes for the usual reason—that government wastes my hard-earned money. No, I resent paying taxes because if the government wants my money, it should have to do the work of figuring out how much it wants. I don’t click on a book on Amazon.com and then fill out 20 pages of forms to figure out how much it will cost me, and then keep every receipt and form in case Amazon wants to make sure I got the number right five years from now. If I had to do all of that for Amazon, I’d have an even lower chance of reading Finnegans Wake."

In fact, the tax system is so complicated that when the IRS studied 46,000 audits of taxpayers in 2006, they found that 67% of the problems were unintentional errors. Even the IRS computers have trouble navigating the system; 27% of those errors were computational errors by the IRS or tax preparer. To deal with all these errors, Congress created a Taxpayer Advocate Service, overseen nationally by Nina Olson who has tirelessly fought to help foster a more trusting relationship between taxpayers and the IRS. She points out that the wait time for half of the people who have written to the IRS is more than six weeks. Not surprisingly, the 1% get special treatment even by the IRS - they're some of the only people who actually get face-to face time with the IRS if audited. Nina is looking into the psychology behind those who do not pay taxes, using data to learn what regions, jobs, income levels, etc. are more likely to pay or not pay taxes. She strongly believes the government needs to focus on innovation within the IRS.

"The IRS budget, currently $11.8 billion, has been cut each year for the past two years, resulting in a hiring freeze. “No one is willing to fund the IRS to do imaginative thinking,” she says. “The military gets funding to develop the next new weapons system. But the IRS does not get funding to sit down and say, how could we harness the iPad? How could we harness video technology to talk to the taxpayer in their home? I mean, we don’t even e-mail or text the taxpayers. We’re so far behind.”

Finally, in today's New York Times article, A Tax Code of Politics, Not Reason, Eduardo Porter points out how the complications of our tax system can attributed to compromises between the Democratic and Republican parties. Parts of the tax code that seem to charge a lot to taxpayers are actually littered with loopholes for certain groups.

"Among the 34 nations in the Organization for Economic Cooperation and Development, only Mexico and Chile collect less in taxes. The average across the O.E.C.D. is 9 percentage points higher."

Eduardo suggests simplifying the tax code and implementing higher consumption taxes, a suggestion supported by the vast majority of economists and a strategy that has worked in prosperous countries like Denmark and Sweden.

As usual, after reading a few articles about our archaic tax system and our economic policy shaped by people with special interests, I feel informed but helpless and also furious. Why is so much of our economic policy shaped by politicians when bi-partisan economists have quantifiable data to support their policy recommendations? Would I want an insurance company standing in for my doctor to determine my care? Both parties have managed to stand together to defeat the enemies of our country because we believe we will be stronger as a nation. Why should our economic policy be any different? What good is it to protect us from outside enemies if within our own country, we're nurturing a select few through partisan economic policies?

Occupy Wall Street - A Turning Point

It's hard to write about Occupy Wall Street and say what has not already been said but I'll share my thoughts. If you live near New York City, you should visit the movement because it's unique experience that can't be fully taken in through pictures. I absolutely support the movement. These people are sacrificing their time, comfort and daily lives to stand up to a system that is not working. And when I say system, I believe it's not the absolute fault of Wall Street, but an entire American system that includes people spending beyond their means, a culture that values having more stuff, government regulation or lack of, politics, unions, our health care ... the list goes on.Their two weeks of occupation is gaining more traction than countless opinion articles in the New York Times and they're doing more than most of us who are merely complaining to our friends and family about our anger against Wall Street. Occupy Wall Street looks like a scene from an apocalyptical movie where people from all walks of life come together to fight for a cause. You have the Jesus lovers, hippies, homeless, yuppies, students, blue collar workers, old, young, musicians, super heros, yogis, and then you have all the people coming to observe this cast of characters, capturing moments with their iPhones, iPads, point and shoot video cameras, fancy cameras, analogue cameras, or pens and notebooks. There are people who choose to protest with their voice in song, use their wit in clever signs, their t-shirt design skills, their sub-conscious in meditation, or their hands letting their instruments speak. And their are the cops who stand around doing their job and watching the movement with amusement.

But a picture tells a thousand words.