It's that joyous time of year: income tax time. So I spend time with my accountant. I don't want to see him, but I must. I could not do what he's doing. The tax code has grown so complex that today most Americans hire someone to do their taxes.
For the money I pay my accountant, I could get a hundred massages. I could buy a fancy motorcycle. I could take a cruise ship to Venice and back.
Better yet, I could do some good in the world. I could pay for two Habitat for Humanity homes or help three kids escape government schools by paying their tuition at a good Catholic school.
What a shame that I pay my accountant instead.
How'd we get to this point? U.S taxes were once simple! The government funded itself on tariffs and excise taxes. It didn't violate our privacy by asking us how much we made or how many dependents we have.
But in 1913, the politicians decided they needed an income tax.
At first, they took little money: just 1 percent on incomes between $20,000 and $50,000. Those were big incomes—adjusted for inflation, $50,000 is $1.1 million today. The top bracket paid 6 percent, but that only applied to people who earned at least $11 million in today's dollars. Anyone who made less than $400,000 paid no income tax.
But leave the amounts aside. The increase in complexity is just as evil.
In 1913, the first tax form and instructions totaled four simple pages. Today's 1040, with instructions, totals 176 pages. How did this happen? Because politicians win votes by giving gifts to favored groups.
On my FBN show tonight, I'll show clips of the pandering legislators applauding themselves for offering tax credits to special interests. The favored groups cheer their tax breaks, but the result is that everyone else pays more, and everyone must spend more time deciphering the rules.
And with every credit, the tax code gets more complicated. The code is now 3,784,745 words long, not counting the 2009 and 2010 changes. It will get worse in the future.
Americans spend more than 7 billion hours trying to comply, according to a forthcoming study from the National Taxpayer Union (NTU).
"That is the equivalent of 3.7 million employees working 40-hour weeks year-round without any vacation. That's more workers than are employed at the five biggest employers among Fortune 500 companies," writes David Keating in the NTU study.
"Counting time and money for individual taxpayers, the compliance burden would total an incredible $103 billion for individual taxpayers alone."
That doesn't include the time spent doing state and local forms, or more important: the burden of "tax minimization strategies" on the economy.