We have discussed Campbell’s comments on the issues of tax level and income redistribution in The United States: Undertaxed Nation. Here we will cover her points with respect to the characteristics of the US tax code.
The US taxpayer who would choose to tackle the task of filing personal income taxes on his/her own faces a formidable foe.
Not surprisingly, a large and prosperous industry has grown up around the task of helping people make their way through this maze of forms and questions. Computer software can now be purchased to minimize the pain. Sadly, even the poorest tax return filer, one who has no tax to pay, but who would receive a significant payment from the Earned Income Tax Credit, feels the need to share some of that benefit with a professional tax preparer in order to insure that the forms are filled out properly and that they receive their money with no delay.
That is a lot of money; and it involves a lot of people. Consequently, there exist lobbyists who actually argue against simplifying the tax code.
To avoid the appearance of creating programs that spend funds, Congress creates tax deductions, grants, refunds, and subsidies that distribute money in the hope of accomplishing something. Besides being dreadfully inefficient, they add complexity to the tax code because forms must be filled out to determine both eligibility and the amount of money involved.
Not surprisingly, Campbell can point to countries that have better ways of doing things.
Campbell provides the effort required to deal with allowances for children as an example of how matters could be handled more efficiently.
Does that last quote imply that the US does not have an "advanced-country government?"
There is another cost—one that does not show up directly in terms of dollars and cents.
People often claim that we are accumulating so much debt that we run the risk of becoming Greece. Debt is not going to make us into another Greece. Our major problem involves the large number of people who have no trust in government. If that distrust ever bleeds over into tax compliance, then we have a big problem. Right now, most people pay their taxes. If distrust in the government, and its tax code, ever reaches the stage where people feel free to avoid paying their share of taxes, then we will have become Greece.