Announcing a push for comprehensive tax reform on Wednesday, President Trump railed against the tax code’s complexity.
Ninety percent of taxpayers, Trump said, need help to file their taxes. This statistic, he noted, evidences a tax code predisposed to special interests and the wealthy. In other words, to those who can afford legions of tax lawyers and accountants to help them find their way to a low-net outlay. For everyone else? Too bad.
Trump is correct to lament this situation. As someone who has filed taxes in the United Kingdom and the United States, I can personally attest to the comparative insanity of the latter system.
In Britain, filing taxes as an individual is a relatively simple endeavor. Tax forms are short, easy to find on the U.K.’s IRS-equivalent website, and combine different income types onto a few pages.
In contast, federal and state taxes require the filer to navigate a minefield of repeating forms, and consider a huge array of deductions. You know your tax code has a problem when guidebooks such as “taxes for dummies” are over 500 pages long! But each year, as Congress creates new regulations and new cutouts for special interests, the tax code continues to grow in length. The tax lawyers grow stronger, the rest of us grow more aggravated.
Still, the problem here takes root in far more than a simple measure of wasted time. After all, every dollar that is spent on a tax accountant or lawyer or online tax assistant is a dollar that could otherwise be invested in the pursuit of happiness. In 2016, Intuit, which owns TurboTax, made $4.7 billion in revenue. H&R Block made $3 billion. Evidencing how much these companies have at stake in the tax code’s continued complexity, as Trump spoke of reform Wednesday, H&R Block’s stock fell to a nearly three-month low. At least for a moment, the common man and woman had a fleeting sight of hope.
Ultimately, as the debate over tax reform heats up, the major battle will focus on where taxes should be cut and what deductions and loopholes will be closed. Yet as they argue with one another, Republicans and Democrats should share commitment to one common cause: making it easier to pay taxes.
