Simplifying Tax Filing May Just Be Too Easy for Government
Just in time for Tax Day comes a National Public Radio program on Joseph Bankman. In 2004, the Stanford tax professor ran a pilot program in California that vastly simplified tax filing. In "ReadyReturn," the state sent out pre-filled returns for people to sign or revise. One participant gushed, "Finally government's doing something to make my life better..." Encouraged, Bankman hired a lobbyist to incorporate ReadyReturn into the state's tax code. Even though many other countries use a similar system, his plan was defeated by groups that profiteer from government-mandated tax-filing misery. Although I loathe filing taxes, I am relieved, because our annual ritual has one positive benefit. It can serve as a teaching opportunity to educate the public about a monstrous injustice.
In several respects, Bankman's proposal makes sense: "The government knows what you earned, and they fill out your tax forms for you." You might reply, "Yeah, that's what computers are for." And computers could buzz through the Byzantine tax code, too. We could enjoy April, and the savings would be enormous. The IRS estimates that filing takes Americans 6 billion hours a year -- nearly 8,700 lifetimes. That’s not including an additional $200 billion in compliance costs. If time is money, and we use the government's own cost-benefit methods, this is equivalent to another 23,100 lives. Merely filing our taxes is the time equivalent of the IRS wiping out a town the size of Juneau, Alaska, every year.
But what about the moral issue? Cost-benefit analyses are flawed because they ignore the government’s actual function: to protect individual rights. Filing taxes is a waste of your time -- or that of someone you pay to file them for you. Bankman notes in his interview that, "[O]ne of the most important interactions you've got with your government ... makes you pissed. You can't understand it. You're anxious. You're worried about screwing up."
You should be angry, and not just because filing is needlessly complicated. The time and effort wasted filing pales in comparison to the taxes themselves. Tax Freedom Day for 2016, the first day you start seeing your own money, is April 24. Yes, I said April 24. That means you work basically as a slave for a third of your life. Consider what you could have done with that money or the time it took to earn it. Tax bureaucrats don't factor that -- or the propriety of what they are doing -- into their calculations. And neither does Bankman's proposal.
"Propriety?" You might ask. Okay, I will concede that, (1) some of your taxes go to places you might send it anyway, (2) some of your taxes fund legitimate functions of the government, and (3) the IRS is not actually killing anyone. Nevertheless, I ask you to consider two questions: (1) "By what right (or reason) does the government force me to do something I would anyway?" And (2) "By what right does it force me to fund anything I oppose?" Here’s what Ayn Rand had to say about this travesty:
In a fully free society, taxation -- or, to be exact, payment for governmental services -- would be voluntary. Since the proper services of a government -- the police, the armed forces, the law courts -- are demonstrably needed by individual citizens and affect their interests directly, the citizens would (and should) be willing to pay for such services, as they pay for insurance.
"But we've always had taxation," you might protest. You are correct, and I have no illusions about changing the tax code overnight. Nor do I think we can quickly solve the more fundamental moral problem of the entitlement-regulatory state, manifested by the tax code. But history shows us that others have prevailed against much greater evils, over similar objections. For example, abolitionists like William Lloyd Garrison ended slavery in mere decades, by refusing to cow before its enormity, by rejecting inertia, and by arousing in their countrymen the indignation that cause demanded. The enormous amount of our time, effort, and ingenuity taxes waste every year cannot be replaced, and this should make us angry. In that way, our senseless annual ritual of filing taxes serves the useful purpose of reminding us that something is horribly wrong. Rather than making it easier for the government to pick our pockets, we should work towards not having it pick our pockets at all.