Here’s the simple reason that it’s complicated to reform the tax code. We all know it needs to be done and there is even significant bi-partisan support on the Hill for reform. But I’d bet against much happening.
“WASHINGTON — Nine in 10 Americans will find the maze of credits, deductions and exemptions on their tax forms so confusing and difficult that they’ll hire someone or turn to special compuer software to fill out their returns. Even the commissioner of the Internal Revenue Service says he pays someone to do his taxes.
President Barack Obama and key lawmakers from both political parties say it’s time for a serious national discussion about making the tax code simpler and fairer. It’s going to be a long talk, one that could last years. Why? Because every deduction, exemption and credit, every layer of complexity, is important to somebody, in some cases millions of somebodies.
“That’s what the tax code is now, it’s a whole set of winners and losers,” said Howard Gleckman, a fellow at the Urban Institute and editor of TaxVox, a blog on tax issues. “If you reform it, you’re going to create new winners and new losers, and the losers always scream much louder than the winners cheer.”
The article ends with “The dirty little secret is that the largest special interests are us — the vast majority of U.S. taxpayers,” Olson said. “Virtually all of us benefit from certain exclusions from income, deductions from income, or tax credits.”
So the paradox is that while we all want to simplify the code, nearly all of us would vote against it.
At Euclid, we do not pretend to know whether there will be meaningful tax reform or what shape it might take or when it might happen. But intractable tax revenue issues, our current national, state, and municipality debts, unsustainable future promises, and ongoing federal deficits as far as the eye can see certainly make us feel better about our broad asset class diversification and the day-to-day risk controls that we have chosen to employ.
Sedaka, Unparaphrased: http://www.youtube.com/watch?v=tbad22CKlB4