Another Tax Day

With the beginning of a new election cycle there has been much talk about another change to what politicians refer to as the healthcare system. It is really just another modification to health insurance. It may improve access to healthcare as more people can afford the insurance, and it may restrict access as more doctors and medical students decide it’s not worth the hassle. Some critics complain that a government-run system will put most of the health insurance industry out of business. As usual the two sides have opposite opinions.

Since today is “tax day,” the deadline for filing personal income tax, I would like to make an alternative proposal. If the government is going to put any industry out of business, it should be the tax preparation business. Think about it; what value does it add to our lives or to society?

Now I have nothing personal against paid tax preparers. Some of my friends and relatives are in that business. And as one site that solicits tax preparers points out: “Tax preparation is BIG business employing hundreds of thousands of people, mostly small business, but with [total] estimated revenues last year of $11 billion. They are also recession resistant as every American is legally required to submit an income tax return.”

Do we get anything tangible and worthwhile from that $11 billion we spend each year? No. We get someone to follow complex rules and add up numbers for us to keep us out of trouble. That complexity is imposed by a government that refuses to simplify the system to a point where everyone could do it for themselves. (We are also required to pay sales tax in most states, but they don’t ask us to stand in the checkout line and calculate it ourselves – and then penalize us if we get it wrong!)

Some will recall back in 2009 several appointees to the Obama cabinet were found to have had tax problems. “Kathleen Sebelius, President Obama's nominee to become Health and Human Services secretary, said in a letter obtained by the Associated Press that she made ‘unintentional errors’ on her taxes and has corrected her returns from three different years.” Obama’s original nominees for HHS secretary and for chief performance officer “withdrew from consideration over tax issues.” Timothy Geithner, who became Treasury secretary, had to pay $42,702 in additional taxes and interest for tax years 2001 to 2004 around the time of his nomination. How user-friendly is a system that can trip up a potential Treasury secretary? 

The whole setup is flawed. It would be like having to hire someone to ride in your car and warn you to slow down because the speed limit signs were too complicated for someone without special training to understand. If that were the case, people would scream until the DOT fixed the problem so we could use our money for something more productive or enjoyable.  But when it comes to taxes, everyone likes their special little benefit, and the complexity persists.

Meanwhile the $11-billion industry adds about as much value to society as being forced by law to hire someone to shovel snow off your sidewalk in the summer. The money buys you a service to unload an unpleasant chore. But that chore is made necessary only by a totally fabricated set of regulations driven by a multitude of diverse special interests, most of which could easily be eliminated if lawmakers had the guts to do it.