How - Dov Seidman [43]
CHAPTER 5
From Can to Should
[There is a] difference between what you have
a right to do, and what is the right thing to do.
—Potter Stewart, U.S. Supreme Court Justice
Everyone loves tax time, that special time of year when we sit down with our loved ones and measure our financial commitment to society. Around the world, people throw joyous tax parties, where we celebrate our dedication to funding a fair, just, and honorable society. Feasts are made, wine uncorked, and people dance with gleeful abandon in appreciation of society’s goodness.
Well . . . maybe not.
I pay taxes in the United States, so that’s the system I know the best. According to U.S. Internal Revenue Service (IRS) estimates, taxpayers in the United States spend about 45 hours on average on paperwork per tax return filed each year, very little of it, I’m sure, in celebration.1 Every hour requires a small dialogue with yourself. As distasteful as it might be, recall it for a moment. You consider each receipt. Can you deduct it? Should you report it? Can you ignore it? What if you alter the number a little to your benefit? As you massage the numbers, do you quietly wrestle with the likelihood of being audited versus the potential gain of a little inaccuracy? Does the stress of potential discovery add an additional, nonmonetary cost to the process? Do you carry that concern with you, even when you are not actively engaged in the process? How about the emotional costs? Do you argue with your spouse or partner, or stress over the amount of money you’ve spent or not saved to pay the tax man? How much time do you spend actively not doing your taxes, procrastinating because they are such a drag? While you are not doing them, aren’t they still in the back of your mind? Do you carry them around with you even when you’re avoiding them?
Now consider the so-called flat tax. Imagine how little thought, energy, and time you would spend each year meeting your civic obligation to fund the government if you had but a single payment to make that equaled, say, 20 percent of gross earnings no matter what your income, with no deductions or loopholes. My guess? About half an hour. The savings to the nation in productivity gained? Billions of dollars. This argument, put forth strongly by proponents of a flat tax, not only would save the objective time it takes to file tax returns, but seemingly would also quiet the internal conflicts that sap focus and concentration from other things. It seems like a no-brainer. Of course, it is not that simple. Rules like the tax code function as proxies for the desires of a society. They approximate a value or standard that a culture deems important, and attempt to achieve it in a clear and unambiguous way. A progressive tax code—where those who earn more pay a higher percentage of their income in taxes—is an attempt to codify a vision of the equitable redistribution of wealth and the responsibilities of the wealthier in society to the poorest members. In other words, the tax code exists to legislate a vision of fairness. If utility, economy, and ease of compliance were the sole aims of the tax code, anything but a flat tax would seem wasteful and inane. When you consider the proxy duties of the tax code, however, the issue becomes far more complicated.
It’s difficult to instill values like fairness and respect throughout a population as large and diverse as the populations of most nations. Yet fairness is a powerful idea, and one most people would agree brings benefit to all. So legislatures create a tangled and inefficient set of rules they believe approximates the prevailing sense of what is fair. This creates a paradox. Almost everyone can argue that, from his or her perspective, one part of the tax code or another is unfair. Whether you feel corporate loopholes benefit the powerful over