Republic, Lost: How Money Corrupts Congress--and a Plan to Stop It by Lessig Lawrence

Author:Lessig, Lawrence [Lessig, Lawrence]
Language: eng
Format: mobi, epub
Tags: POL000000
ISBN: 9780446576420
Publisher: Hachette Book Group
Published: 2011-10-04T16:00:00+00:00

2. Simple Taxes

It has been a central plank of the Republican Party since before Ronald Reagan that our system taxes too much, and too complexly. Simpler, “lower taxes” has been the common and consistent refrain. Of course, sometimes that refrain has been translated into lower taxes, at least for some. But the aspirations of many on the Right (and sometimes even on the Left, such as Jerry Brown in the 1992 presidential election) that we move to a flat tax, so simple it could be completed on a postcard, have not been realized.

Why? Who benefits from complex taxes? And how could that benefit possibly outweigh a universal push for simplicity?

To understand the nature of tax law in America, you have to understand one simple point: its complexity is a feature, not a bug. From the perspective of those closest to crafting the code, complexity offers a host of opportunities that simplicity simply can’t. Some of those opportunities are legitimate: the chance to better target taxing to achieve economic goals. But many are completely illegitimate. And for the illegitimate, when simplicity is pushed, complexity pushes back harder.

The most obvious, if most trivial, example of this is the very system for collecting taxes. In 2005 the State of California started experimenting with a system they called “ReadyReturn.” The ReadyReturn system treated taxes the way Visa treats your credit card bill. Rather than demanding that you fill out a form listing all the times you used your Visa over the prior month, and then sending a check to Visa for the total, Visa sends you a bill that lists all the charges you made, and the amount Visa thinks you owe it. Of course you’re free to challenge any charge on the bill. Credit card companies are pretty good about removing them. But obviously, given that Visa knows every charge you’ve made, it makes more sense for them to fill out your bill than for you.

Advocates for the ReadyReturn asked, Why aren’t taxes the same? For the vast majority of taxpayers, the government, like Visa, knows exactly how much the taxpayer owes. Wages are reported to the government by employers. Interest and dividend payments are reported by banks. For most Americans, that’s all there is to the annual tax ritual. So why not a system that sent the taxpayer a draft tax form that was already filled out? As with the Visa statement, the taxpayer would be free to challenge it. But for the vast majority of taxpayers, no change would ever be needed.

Not necessarily a postcard, but just as simple.

In 2005, following a plan sketched by Stanford Law professor Joe Bankman, California implemented an experimental system like this for taxpayers with just one employer and no complicated deductions. The reviews were raves. As one report put it: “Most of the taxpayers who voluntarily participated in a test run of the state’s Ready Return program said it alleviated anxiety, saved time and was something government ought to do routinely. More than 96% said they would participate again.

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