Taxes, like death, are said to be inevitable but they can be inscrutable as well.
We just had our taxes “done,” and, like, most Americans, the process is mystifying. The feeling that the income tax system is somehow all messed-up is widespread, except that no one knows quite what to do about it.
Our tax guy is Chris (we call him “Cross Country Chris” because he used to be a distance runner) and he has prepared our tax returns for over 20 years. Always the iconoclast, he is a passionate Democrat with his offices in the heart of arch-conservative South Orange County.
When we visited him to submit our records, he was wearing a T-shirt reading “Isn’t it great to have an Irish president: O’Bama.”
(If you don’t want to drive to Mission Viejo, I might point out Scott Tax right here on Main Street in Garden Grove).
A droll little bit of political humor, but politics is very much at the heart of who gets taxed and how much. I don’t pretend to understand the tax code, but I do believe that the reason it’s so incredibly complex is – in large part – due to the special pleading of folks rich and poor who want some kind of tax break.
For example, as a business owner, I can deduct all kinds of stuff you can’t. If you want to buy a chair for your living room, it’s all on your dime. But if I buy the identical chair for my office, it’s a deductible expense.
The tax codes are written very much to the advantage of the commercial class, which is OK by me for obvious reasons.
This year, amazingly, we even are getting an oil depletion allowance. Marilyn inherited some money from a long-forgotten mineral rights holding, and because it’s from a petroleum company, we get a tax break.
The oil firms do even better: they get to write off not only the cost of drilling for the oil, but also the value of the lost resource of the oil they took out of the ground and sold to someone else.
How did this happen? The oil people – bless their hearts – lobbied Congress to put that in the tax code. The argument was that it encouraged oil exploration and a plentiful supply of cheap domestic petroleum, a promise which must seem ironic now that we’re all paying $4.33 or more per gallon.
The complexities and iniquities of the income tax system often lead to calls for reform. Herman Cain got some traction earlier this year with his 9-9-9 proposal before his campaign foundered over accusations of sexual harassment. A perennial alternative is the idea of a flat tax; one rate paid by everyone.
Set aside the idea that the wealthy (i.e., anyone who earns more money than I do) should pay a bigger share of their income than poor folks, or the middle class. Let’s look at the concept of a tax code with no exemption at all.
That would mean we couldn’t write incentives into the code to encourage businesses or people to do good things. It would mean, for example, that charitable donations would take a major hit, because there’s no tax break. Arts groups, youth organizations, churches, etc. would suffer, perhaps fatally.
You couldn’t write a law, for example, that gives an exemption to businesses that move their manufacturing operations back to the United States.
Such a break might create hundreds of thousands of new jobs, which would generate millions in income tax revenue. But that wouldn’t be allowed.
How about deducting the interest you pay on your mortgage? That’s the tastiest exemption for many homeowners. Have to get rid of that …. If you allow one exemption you’re opening up the door to many more.
So, Jim, are you saying that this mess is the best we can do? No, but it’s what we have done. There’s room for a lot of improvements to be made, but not until we come up with something that’s not merely different, but better.
Now, being allowed to claim your pushy Australian shepherd as a dependent, that would be better . . .
Jim Tortolano
