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Annual exercise in frustration: calculating the income tax bill

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Could the taxation process be made simpler? Of course it could. But how much screaming would arise from the many thousands of tax prep businesses — all those CPAs, all those H&R Blocks — that owe their existence to the average person’s inability to deal with the hopelessly complex process of paying taxes?

 

The problem with all the shouting, screaming, and posturing these days about reducing spending and downsizing government is that we give lip service to the goal, but don't want it to apply to us.

Well, yeah, let’s slash spending on Medicare … but don’t reduce benefits to our elderly parents who couldn’t otherwise afford medical care and prescription drugs. Cut government assistance programs … but don’t take away unemployment benefits to Uncle Joe who was downsized and can’t find another job. Eliminate tax breaks, sure … but don’t take away our mortgage interest deduction on the condo at the beach.

Tighten belts, sacrifice, bite the bullet … but gore somebody else’s ox, please. And in the end, the oxen that get gored are usually those that have the least influence in the political process, those without high-paid lobbyists, those who don’t make generous contributions to the politicians who make the rules.

An example of the dilemma that exists with meat ax reform is one that most of us hate: the annual torture of income taxes.

First of all, throughout the year there is the necessity of keeping every receipt, every cancelled check, every piece of paper that may even tangentially relate to taxes.

Then, sometime after January 31, when all the W2s, 1099s, and various other forms have trickled in, one has to try and organize them (takes disorganized me a good half day), then either spend hours trying to enter all the info into relevant tax forms (requiring a level of masochism not many of us possess) or tax prep software, or take the whole kit and kaboodle to a tax preparation service.

OK, here’s where it gets squirrelly, where the absurdity of that multi-thousand-page Internal Revenue Service tax code comes into play. I’m just an ordinary working stiff with a retired schoolteacher wife, and our finances are pretty straightforward: incomes, laughably small amounts of interest on savings (with almost zero percent interest rates, it’s probably a negative return and we’d be as well off stuffing the money in a mattress) — nothing complex, no complicated tax shelters or offshore accounts.

And yet, the number of pages of forms our CPA generated for the IRS and the state for 2010 taxes was 36! Thirty-six pages filled with arcane calculations that I couldn’t explain if my life depended on it, to determine how much two plain vanilla citizens have to pay federal and state governments.

In almost every Congress (current one included), there are half-hearted efforts at tax reform/simplification, which usually go nowhere or result in even more convoluted regs.

Could the taxation process be made simpler? Of course it could. But how much screaming would arise from the many thousands of tax prep businesses — all those CPAs, all those H&R Blocks — that owe their existence to the average person’s inability to deal with the hopelessly complex process of paying taxes?

Whose ox would get gored? Guess.

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