There seem to be very few people that disagree with the notion that our current system needs some changes. Both sides of the aisle talk the talk, but neither are willing to walk the walk. Why is this? In my mind the answer is both simple and complex.
It would be political suicide for either party to touch popular deductions such as Mortgage Interest, or Child Credit. Equally it would be hari kari for individual politicians to mess with the special interest groups and industries that fuel re-election campaigns.
Based on an earlier comment by author and ex IRS agent Wayne Vinson about just the complexity of the 1040 form, never mind the political ramifications of the items on it. I decided to ask him to expand his thoughts, Wayne, can the tax code be simplified, particularly for the average family, he said this:
As to simplifying the code: Yes, it could-but I doubt if it ever will. Congress has to do that and unfortunately, congressmen and congresswomen tend to be career politicians for life who are much more interested in pleasing everyone than in reducing the complexity of the tax code. Form 1040 items 23 through 35 are deductions which reduce taxable income,
Some of which are: educator expenses, health savings account deduction, SEP and SIMPLE plans, Penalty on early withdrawal of savings, IRA deduction, student loan interest deduction, tuition and fees, and six more-all of which reduce gross income and income tax.
Or turn the form over and take a look at items 45 through 53.
45 and 46 are the alternative minimum tax, which I think is designed to cause people who use all the legal loopholes, to pay at least a little tax. Why not eliminate the loopholes and the alternative minimum tax? 47 through 53 are various credits, most of which are fairly new crowd pleasers.
Keep in mind that a credit reduces your tax dollar for dollar. Look at 1040 line 51, “Child credit.” That credit is $1,000 per child. Which means that if it had existed 30 years ago, my yearly tax would have been $5,000 less than it was.
The bigger question is what can be done? Alas I must agree with Wayne Vinson, Congress do not have the ‘Intestinal fortitude’ (guts) to take on this monster. The 77,000 pages of what likely is the worlds biggest book will do nothing but grow.
I rather like this list of little known tax deductions. While I am sure that they are legitimate, I am less sure about how useful they might be.
Wayne Vinson was an IRS agent for 33 years and the author of a real thriller, Tax Collectors and Other Sinners, the story of a psycho killing tax collectors. It is available at amazon.com as an E-book or soft cover.