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What happened to the postcard-sized tax return?
Idaho

What happened to the postcard-sized tax return?

Nearly 30 years have passed since the late Utah Senator Bob Bennett told the Deseret News that he thought the idea of ​​shrinking the standard income tax form to postcard size would be a major issue in the 1996 presidential election.

We suspect he wasn’t the first politician to have this idea, but we know he won’t be the last. Five years ago, then-President Trump promised the card during a speech in West Virginia, telling the audience, “This will be the last time — in April — the last time you use that old-fashioned, big, many-page, complicated tax form. Because next April, in many cases, you’re going to have just one page, one card.”

And yet, despite these tempting wishes of politicians in Washington, things have been moving in the opposite direction, and not in a slow, creeping way.

According to the Tax Foundation, a nonpartisan research group in Washington, the amazing technological advances since 1996 – including electronic tax filing – have not kept pace with the increase in tax complications, making filing a tax return even more difficult and time-consuming.

A new report found that 94% of tax returns are now prepared using software and 90% are filed electronically. And yet the White House Office of Information and Regulatory Affairs estimates that Americans will spend a total of more than 7.9 billion hours this year complying with IRS filing and reporting requirements.

Put another way, all of that work equates to “3.8 million full-time employees doing nothing but filling out tax returns—roughly the population of Los Angeles and nearly 46 times the size of the IRS workforce.”

In the spring, when filing deadlines approach, people howl about all this. But now we are in the middle of another presidential election season, and neither of the two major candidates is addressing this issue.

This is inexcusable because the costs of these complications are enormous.

The Tax Foundation went a step further and calculated how much it would cost to pay someone a reasonable hourly wage for the 7.9 billion hours the country spends filling out tax forms. Then it added in the $133 billion that Americans actually spend filing taxes. The result is a total of $546 billion in real, or opportunity, cost just to pay taxes each year.

If you are cynical and sneer that this is a drop in the bucket compared to Washington’s annual spending, then what you really have to ask yourself is that this amount represents almost 2% of the country’s gross domestic product, or in other words, its economic output.

The foundation also pointed out the importance of this opportunity cost. “Every hour spent filling out tax forms and returns is an hour that parents cannot spend with their families or that entrepreneurs cannot use to grow their businesses,” the report said.

That’s a huge price to pay for filling out forms.

So why has Washington failed to make good on its promises to simplify income taxes?

Last spring, a Wall Street Journal article stated: “The tax code reflects the complexity of modern financial and social life, but it is also a hodgepodge of competing political interests that change over time and often collide in unexpected ways.”

However, this does not fully explain why Estonia can send its citizens tax returns each year that are already filled in with numbers. Citizens can dispute the numbers if they want, but the risk of being fined for underpayment is significantly lower.

Nor does it explain why a complicated lifestyle in the United States necessarily leads to complicated tax forms.

The article also blamed human nature. “The harsh reality is that no matter how much taxpayers decry the complexity of tax laws, few mind when they benefit from them.”

It’s true that industry and special interest groups lobby for tax relief and wage public relations battles when their existing relief is threatened. But Americans elect members of Congress to lead, and that includes the difficult task of standing up to special interest groups.

No one could seriously argue that it’s OK to waste two percent of the nation’s GDP on nothing more than preparing tax forms. Perhaps a postcard-sized tax return is too much to ask, but Congress and the president could at least take some steps toward simplification instead of always going in the other direction.

We would definitely like to hear more candidates talk about it this year.

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