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View Diary: The "No-Losers" Tax Simplification Proposal (25 comments)

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  •  I wish it were that simple... (0+ / 0-)

    With all due respect, I wonder if you're thinking too much like a physicist, despite your best efforts to be a realist:

    1. I am not sure that all 100,000+ plus pages of tax code have been reduced to computer code. When the government has to estimate the effect of a tax code change, they could simply take the tax revenue from the last year as a baseline, search all the filers to find out who used the affected parts of the tax code, and compute a delta using the proposed changes. I seriously doubt they recompute everybody's tax return since most people wouldn't be affected anyway by most changes.

    2. People challenge the IRS's interpretation of the tax code all the time. Anybody affected by an IRS ruling can go through IRS arbitration, and then to the courts all the way up to the Supreme Court (though that almost never happens). I'm not talking about nut jobs who think the government has no right to tax us, but people (and their tax preparers and attorneys) who interpret the tax code one way or another. My point is that nobody is making sure the tax code is internally consistent. In practice, the code gets interpreted one way by the IRS until somebody yelps, or somebody thinks the tax code can be interpreted another way and the IRS yelps. However, to do what you want to do, you have to go through and make all these interpretations and guarantee consistency before you can begin. If the right of somebody who is affected by an IRS ruling to challenge it is derived from due process of the Constitution, then you are constitutionally bound to deal with any challenges that arise before you can begin, or recompute everything if the IRS's interpretation is successfully overturned years later.

    3. A lot of taxes and tax credits are put there for social reasons. For example, the tax credit for buying a Volt, the upcoming individual mandate of the ACA, or accelerated depreciation schedules designed to encourage capital investment. Presumably you'd like to exempt these from being eliminated (even though doing so might produce no net tax change for the people affected) to preserve their social effects. However, which ones do you keep, and which ones do you allow to be possibly eliminated by the computer? The examples I cited are all controversial, and most people wouldn't support them all (for example, the oil company tax credits now being challenged in Congress are a form of accelerated depreciation). There are many, many others. Once again, there is likely to be a lot of debate before you can apply your algorithm.

    4. The people who put their special interests in the tax code probably will see a big increase in their taxes if their special interests are removed. After all, it costs a lot of money to buy off Congress so they're probably getting a huge return. These are few in number (certainly no one special interest tax provision will affect one of your 100 classes significantly), but by definition they are very powerful. All of them are likely to object since most of their special interest provisions will be removed. These people didn't play fair getting their interests into the tax code, and they're not going to play fair if those interests are threatened.

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