So Baldwin’s Now For Tax Simplification? Not So Fast.

Two tweets from Tammy Baldwin, Wisconsin’s junior Senator, would make one think she’s had a sudden change of heart when it comes to the vastly complicated U.S. tax code.

It makes for a great headline in a press release. It just doesn’t make for good policy.

As the second tweet from Baldwin’s office points out, this is all about simplifying tax filing, not simplifying the tax code. It’d be something akin to telling someone to use sunscreen to prevent skin cancer, when the real issue is that they’ve been sunbathing non-stop for years.

To a cadre of liberal senators, they believe America’s real tax problem is how companies like Quicken make money with products like their Turbo Tax software; not the fact that the tax code is so complex. They fail to see the forest from the trees to realize that filing one’s taxes is such a hassle, the average taxpayer needs help.

U.S. Senator  Tammy Baldwin, along with ten other senators, will reintroduce the Tax Filing Simplification Act of 2017 to simplify and decrease the costs of the tax filing process for millions of American taxpayers. This year, taxpayers will spend an average of 13 hours preparing and filing their returns, and will pay $200 for tax preparation services – a cost equal to almost 10 percent of the average federal tax refund.

“American taxpayers are forced to spend too much time and money filing taxes when it doesn’t have to be that way,” said Senator Tammy Baldwin. “If Washington would finally act on commonsense reforms at the IRS, we can simplify tax filing and make it less expensive for taxpayers.”

To Baldwin’s credit, she and her office are correct with the statistics they gathered from the Internal Revenue Service about tax prep time and cost; but not surprisingly, it’s only half the story. The true cost to the American economy from tax compliance cost is much, much worse according to a document from the Tax Foundation about Tax Day 2016.

  • The growing complexity of the U.S. tax code has led to large compliance costs for households and businesses.

  • Using data from the Office of Information and Regulatory Affairs and the Bureau of Labor Statistics, it is possible to estimate the total cost of tax compliance on the U.S. economy.

  • Americans will spend more than 8.9 billion hours complying with IRS tax filing requirements in 2016.

  • All in all, tax compliance will cost the U.S. economy $409 billion this year.

The tax code today contains 2.4 million words. That’s twice the size it was in 1985, the last time the code was overhauled.

We shouldn’t live in a world where H&R Block needs to use a Super Bowl ad to announce they’ve got a supercomputer (IBM’s Watson) on board to assist in your tax prep. We shouldn’t need supercomputers to do our taxes; yet today we do. That tax code’s that complex.

If Baldwin and her liberal allies want to vilify the cost of using Turbo Tax, that’s their prerogative. But doing so highlights how unserious they are regarding tax simplification. They’re like doctors treating the symptoms, not the disease; and that disease is the tax code.