A Fine Mess

Originally published in the Ketchikan Daily News, August 2017; written by Tammy Dinsmore

Not many people that I know of likes to talk about, or even think about taxes, so I wasn’t sure what I would find when I picked up the book “A Fine Mess: A Global Quest for a Simpler, Fairer, and More Efficient Tax System” by T.R. Reid.

“In 2015, the government estimates, American taxpayers spent just over six billion hours preparing and filing their income tax returns.” And the author says that the American taxpayers have also spent billions of dollars paying tax professionals to prepare their income tax returns or for income tax software.

According to the author, the United States is due for a complete tax system overhaul in 2018. In fact, it has happened every 32 years throughout the history of the income tax. (1922, 1954, and 1986) The more cumbersome it gets, the more citizens holler for change.

Mr. Reid has studied the tax systems of countries all over the world, and in doing so, has found that, contrary to popular belief, we here in the United States do not pay the highest tax rates in the world. Shocking I know!

This book explains many of the loopholes that corporations use to avoid paying taxes, as well as some of the deductions and loopholes that individuals use.

Mr. Reid offers lots of statistics and comparisons between countries, the good and the bad, and what he advocates for is a Broad Base, Low Rate (BBLR) tax system. This is not the same as a flat tax. By broad base, he means for income taxes, everything each person earns is taxable, including whatever your employer may pay in benefits on your behalf that you may receive. No deductions, exemptions, or credits. This is the same type of taxation system that two different blue-ribbon commissions came up with, one appointed by George W. Bush in 2005 called the “President’s Advisory Panel on Federal Tax Reform” and the other by Barak Obama in 2010 called “The National Commission on Fiscal Responsibility and Reform” (or “Simpson-Bowles”). According to the author, when the findings were published, there was a lot of push-back from many of the special interest groups that took advantage of all the loopholes in the IRS tax code.

He also talks about a VAT (Value Added Tax), which is, to my understanding, like a national sales tax on everything purchased, including purchases by companies/corporations for materials and supplies for their goods.

This is an interesting read. Not so technical and filled with statistics that it’s hard to get through. I don’t know what the answer is, but the author makes his case convincingly and after spending several hours on my personal taxes every year, I’d really like it to be so much simpler!