Want even more proof that the U.S. tax code is too complex?
Consider this series of numbers, culled from the federal budget: In 2000, the IRS employed 43, 243 people in its tax law enforcement division; by 2003 that number had jumped to 47, 658. And this year, it’s expected to hit 49,147.
Whoa! A growth industry!
So the number of people enforcing our tax laws has jumped 13.65 percent since 2000. But the inflation rate rose only 9.8 percent over that same time period. In one respect, an explosion of tax enforcers is understandable. The number of pages of federal tax rules has gone from 45,662 in 2001 to 54,846 last year–a 20 percent increase.
But at least there is someone ensuring that people pay the right taxes, right?
Nope.
Even IRS tax enforcers don’t necessarily understand the tax code. When representatives from the IRS Taxpayer Advocacy Service posed as taxpayers and visited Taxpayer Assistance Centers, they found that IRS counselors were correct 72 percent of the time in 2003 and 80 percent in 2004. So even the so-called experts got it wrong for one-in-five taxpayers they counseled.
And the reason is simple: the tax code is too complex.
Fortunately, more and more analysts and even politicians are turning their thoughts to simplifying the tax code. Proposals range from a flat tax on income to a national sales tax to a tax on consumed income.
In his new book, Speaker: Lessons from Forty Years in Coaching and Politics, Speaker of the House of Representatives Dennis Hastert (R-IL) talks about the benefits of a national sales tax. “People ask me if I’m really calling for the elimination of the IRS, and I say I think that’s a great thing to do for future generations of Americans.”
But if we do away with the IRS, where are those thousands of government employees going to get a job?
Ah! Maybe administering the new Medicare bill.