I was wondering how the tax code complexity debate had progressed while I was away. So it appears that the blogosphere keeps going even when I am not here (sorry, it’s just one of those “what if a tree falls in the woods and you are not there to hear it” kind of things). Having been away for a while, maybe it is my turn to stir the pot again? So I will comment on Joe Kristan’s post, Ben Bateman’s post (of unknown origin) as cited by James Maule, and then James Maule’s posts.

Joe Kristan asserts that the code is asked to do too much. I don’t agree with that statement. Being able to adjust where tax revenues originate from is a valid economic tool at the government’s disposal. This tool is no different than the government’s ability to spend and print more money, to issue and pay debt, and arguably to set interest rates and enter into international trade agreements. The fact is that there are not that many economic tools at the government’s disposal to regulate and possibly stimulate the economy. Why should the government ignore one of the few tools in its economic toolbox? I know that this is an amorphous contention, but the last recession showed how useful such tools can be to help our economy pull out of economic troubles. One can only speculate, but I would guess that our economy would be at least a little worse off if the government hadn’t had the ability to adjust our tax laws (to issue larger refunds, to increase certain tax credits, to maintain historically low tax rates, etc.). So I would say that the code is asked to do what it should – to stimulate the economy in times of economic downturn and hopefully to fill the coffers during times of economic plenty.

Ultimately I think most people would agree that we should all pay our fair share. Just how much our fair share is depends on our circumstances (and unfortunately, our inclinations) – rich-poor, young-old, married-unmarried, etc. Could the code be fine-tuned so as to more adequately allocate the fair share? Yes, but Congress has made some (limited) progress there (for example, I am thinking of the elimination of the marriage penalty). If accounting for this allocation makes the code more involved, then so be it. Aren’t a strong economy and more appropriate allocations of taxes worth it?

Ben Bateman’s post (as cited by James Maule) made some good points. Mr. Bateman made the point that the code is organized and simple when compared to other codes and that it should not be measured against the standard of perfection. I agree. The code effectively provides for a great number of financial transactions and it does so very very well. Lets be honest, of the trillions (or however many) of financial transactions that occur daily, monthly, yearly only a very few raise thorny tax issues. Even when taxpayers come up against thorny code sections those provisions have a way of working themselves out (i.e., not being spotted by the taxpayer or the government, being settled by the government in favor of the taxpayer, etc). Is the code perfect? No, but neither is anything that any human being has created. Along this line I think that any writing (pick any writing as an example), if read with the same critical eye as some read the tax code, would present the reader with numerous inconsistencies and ambiguities. So such arguments or citations to thorny code sections has little meaning.

James Maule also made some points. I applaud Mr. Maule’s belief that his tax students as practitioners do not spread the fear of the tax code, but that ignores the realities of how many tax practitioners carry on their practices. I personally receive numerous calls involving cases where various tax practitioners (most of whom where tax students at one point) have used fear of the tax code to get clients and to overcharge clients. Even worse, these cases often come to my when the tax practitioner accepted a fee but either did nothing or really botched the job. Not to name names, but you could Google reputable and disreputable companies with the term “consumer complaint” to read such stories. The companies of JK Harris and Omni Financial come to mind, not to imply that those companies are reputable or disreputable.

Also, Mr. Maule also states that he does not see how persons who are not sitting in tax classes learn to fear the code if they have not taken the individual tax courses. I would suggest that reading a blog post entitled “The Tax Code is Simple. Not!” might do the trick – especially if it was penned by a tax professor.

So here is another way to think of the Code. I have noticed that many business owners and individuals have some form of legal survival book on their bookshelves (which I have heard other attorneys jokingly refer to as “legal pornography”). You know the kind of book. It provides very general and dated legal information. Based on the number of these types of books that I have seen I am guessing that people actually use them. Personally I think that such books are great if they (1) get the person say 60% or more of the way to the answer and (2) they allow the person to carry on an informed discussion with their legal counsel (who often charge way too much to explain the basics). I think that the code does these two things and I think that it does them very well. So the code should be sold as a companion to various legal survival guides.