Rights 4 Sale

It is deserving of a whole study by itself, but it is probably clear to most that communication is the most important ingredient in peoples’ relationships. 

Actions or things that stop or that block communication cause us to dislike the thing with which we can’t communicate.  A good example would be the tax code.  It is 7,500 pages long (if printed 60 lines to a page, which it isn’t) and there is probably not a CPA or tax attorney on earth that understands all of it.  The average citizen understands a fraction of a percent of the tax code and, guess what, doesn’t like it at all.

The same is true of the heath care bills.  They are 2,00o pages and people, even congress men and women, don’t know what’s in it.  It’s so complicated that the average citizen can’t communicate with it and, guess what, doesn’t like it at all.

There are many more examples.  Cap and Trade legislation.  Financial practices regarding complex investments.  Federal statutes.  They are all complex and hard to communicate with.

So, if you want people to dislike something, just be sure to block their communication in some way and they will not like it, won’t agree about it and will not understand it.

Someone can make a rational decision not to like or support something after learning about it, but the key word here is rational.  Open communication and people can make a self-determined, rational choice.  Cut communication and you guarantee that people will not like it.

In a sane, open and democratic society, those things that increase communication are good and those things that cut communication will cause us to succumb.

Too Big?

When our country was founded, the laws were fairly straight forward.  All you had to do was read the Constitution and you knew where things stood.  In the first few years, the Congress passed a number of laws and the Supreme Court made decisions.  We also had common (British Law) to underpin and supply a background for our legal system.  It was simple in those days.

A lot has happened in 230 years and the laws and regulations have grown voluminous and complex.  This is no more evident than the Federal Tax Code.  With thousands and thousands of pages (60,000 pages), there are very few people who have a complete understanding of the Tax Code.  CPAs, attorneys and Enrolled Agents are expected to be experts, but it is doubtful that any of them could operate without access to extensive reference libraries.

Two states (California and Oregon) require tax preparers to be certified by the state.  These professionals probably understand simple tax returns, but utilize software and reference materials to handle the more complex returns.

Politicians and government bureaucrats don’t understand the Tax Code.  They have to consult with CPAs or attorneys or the IRS to get information.

Further evidence exists.  In tests, tax data was given to an assortment of CPAs, tax attorneys, enrolled agents and tax preparers.  Virtually none of them came up with the same results.  While many were close to each other, the bottom line varied drastically in some cases.  Can that be good – when experts all come up with different answers to the same problem.  Seem very subjective.

Without addressing whether we should have a flat tax or consumption tax, one thing is clear; the current system does not work.

The Tax Code provides guidelines for completing a simple tax return.  Add one complexity and you have to consult an expert or read pages and pages of instruction packed with “if/then” statements and complex calculations.  The bulk of the laws are there to provide loopholes for companies and people with above average incomes.

With a flat tax or consumption tax, we could do away with the IRS saving approximately $12 billion directly.  We would save additional billions (estimated at $300 billion) in tax preparation, planning and compliance.  We would also give executives more time to concentrate on business objectives rather than tax avoidance (not evasion).  The advantages are hard to ignore.

Some people argue that the tax rate should be progressive to give underprivileged families relief and to shift some of the burden to more affluent tax payers.  That seems OK, as long as nearly everyone makes some contribution.

There are other areas that have gotten too complex and it is worth some contemplation regarding how to reset the clock to simplify things so that the average person can understand it.  An idiot’s guide to laws, tax codes and regulations limited to 50 pages or so.

People can have different opinions about whether we should have a flat tax or a consumption tax, but the senior issue is that the Tax Code has become too complex to survive.  If it so complex that no one can follow it, then how fair or useful can it be?