My father was a Certified Public Accountant and dinner time throughout my youth was filled with horror stories about the Internal Revenue Service (IRS) as he struggled to keep up with a tax code that just kept growing.
According to Nina Olsen, the National Taxpayer Advocate for the IRS who heads a staff of 2,000, the American tax system is “a huge convoluted mess.” Despite efforts to determine its length, it is variously estimated to be between 65,000 and 70,000 pages. “We looked at how many changes in the tax law (that) had occurred in the last year alone,” said Olsen, “it was something like 579 changes.” No one can keep up with that volume of changes, not even Ms. Olsen’s office.
As this is being written, President Obama is dominating the news cycle with his message of tax “fairness”, attacking men like Mitt Romney, the presumptive Republican candidate, for being wealthy and citing men like Warren Buffett and other millionaires and multi-millionaires who say they should pay more. It is a longtime populist, progressive message and it is a false message.
Chris Edwards who studies tax policy at the Cato Institute, a libertarian think tank, says, “What happens when you raise taxes for higher-income people; they reduce their productive activities—like working and investing and starting businesses—and they increase their unproductive activities—like tax avoidance and tax evasion. So governments really shoot themselves in the foot if they raise rates too much.”