Conquest’s First Law Strikes Again

It is often useful to recall Robert Conquest’s Three Laws of Politics:

1. Everyone is conservative about what he knows best.

2. Any organization not explicitly and constitutionally right-wing will sooner or later become left-wing.

3. The behavior of any bureaucratic organization can best be understood by assuming that it is controlled by a secret cabal of its enemies.

(The second of these originated as O’Sullivan’s law, so Conquest really just gets credit for incorporating it with the other two.)

Anyway, Dylan Matthews in Vox illustrates for us the first law, in a column on how volunteering to help other people do their taxes taught him that “our tax system is impenetrable, needlessly complex, and intrusive about our personal lives.” Examples:

I’ve also increasingly seen people bringing in 1099-NECs totaling well into the five figures from what sound like pretty normal jobs in retail or food service or janitorial work that one would think should provide W-2s. Almost without fail, this approach winds up screwing workers. 1099-NEC workers tend to come in without having withheld any of their income to pay either income or self-employment tax during the year. We often learn together that they owe thousands of dollars to the IRS, plus perhaps a penalty because they didn’t make quarterly tax payments like they were supposed to. . . .

There are at least three definitions of “child” for tax purposes. One definition allows parents or guardians to claim a larger EITC. A different definition allows a child’s parent or guardian to claim head-of-household filing status, which offers advantages relative to filing as a single person. Then there’s the definition of a “child” for the purposes of the child tax credit (CTC), which takes up to $2,000 per child off families’ tax bills. These are overlapping but not identical categories, and I’ve seen no small amount of confusion from preparers and taxpayers struggling to figure out if a kid is a child for CTC and head-of-household purposes, or just one of the two, etc. . . .

The main tax credits we deal with in VITA are the EITC and CTC, which have their complexities…After that, the most common are the education credits: the refundable American opportunity tax credit (AOTC), which covers four years of undergraduate college education, and the lifetime learning credit (LLC). These credits have subtle differences that become important: The AOTC, for instance, bars students with felony drug convictions from collecting the credit, which the LLC does not; but the AOTC can also be used for the cost of books and materials that are helpful but not explicitly required for classes, which the LLC cannot.

He proposes, among other things, eliminating many deductions and “a flat tax on capital,” which is not as good as it sounds, and some other debatable ideas for simplification such as eliminating returns for most taxpayers and a single-child benefit. Of course, this collision with reality only got Matthews so far: His preferred solutions also include eliminating joint tax returns and all benefits for marriage, which is in line with progressive hostility to traditional families. Still, at least dealing with other people’s taxes puts him closer to the reality of the system than just reading white papers on the latest scheme to stuff yet another favor into the code.