The Corner

Obama Calls for Simpler Tax Code

In response to the thousands of tea parties that took place all over the country yesterday, President Obama promised that he would simplify the tax code.

“I want every American to know that we will rewrite the tax code so that it puts your interests over any special interests,” Mr. Obama said. “And we’ll make it easier, quicker and less expensive for you to file a return, so that April 15th is not a date that is approached with dread every year.”

Does it mean that he is ready to push for a flat tax? Nope. Under his plan, bureaucrats (likely unionized treasury ones) are going to be preparing taxpayers’ tax returns for them. At first, the plan will focus on taxpayers whose sole income comes from one employer and whose interest income comes from one bank. I am assuming it means that the taxpayers will be taken out of the loop and that the IRS will receive taxpayers’ W2 and the bank will report directly to the IRS. Then, it could be expanded to more taxpayers.

According to Austen Goolsbee, one of Obama’s economic advisors and the genius behind the idea, this plan would save taxpayers a lot of money:

Mr. Goolsbee has estimated the plan would save as many as 225 million hours of tax-preparation time and more than $2 billion a year in tax-preparation fees. White House spokeswoman Jen Psaki said the White House is “studying the implementation” of the campaign proposal.

Really? Let’s see. Leaving the obvious privacy aspect of this plan aside, I am not quite sure how this will save money. Obama will have to hire more IRS bureaucrats to do the work that tax preparers do right now. Right? Many more bureaucrats. And actually, today, taxpayers with one income from one employer and with no investment income probably don’t spend that much time doing their taxes and are probably not paying anyone to prepare their tax return. So the plan is to have a bureaucrat do a job that the taxpayer was doing himself at very low cost? As for the more complicated returns, without a true simplification of the tax code, it will take IRS bureaucrats as much time, and likely much more time, to prepare the returns than private tax-preparers. This doesn’t sound like a money saver to me.

One last thing: President Obama needs to stop taking about how he is cutting taxes. Tax rebates and credits are not tax cuts. They are just more spending.

Read the whole thing here.

Veronique de Rugy — Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

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