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Why Are Taxes So Complicated?

why are taxes so complicatedThey have been talking about simplifying the Tax Code for years, yet each year it seems to get more and more complicated.

The current administration has proposed initiatives that would give many taxpayers a return prepared by the IRS, with everything filled in based on the information provided to the IRS from employers, banks, etc. All the taxpayer would be required to do is look over the form, and if they agree with the figures, sign it and send it back.

Many economists and tax experts support such a plan. The reduction in errors and investigations could save the IRS an estimated $36 million yearly. An economic advisor to President Obama estimated that this type of filing would apply to up to 40% of taxpayers, and would save them hundreds of hours and more than $2 billion yearly in tax preparation fees.

It would be a much easier way for millions to pay, saving them both time and money. For the IRS, it would also be a great way to encourage compliance, save time, and save money.

So what is the problem? Why don’t these logical time, cost and aggravation-saving tax reforms ever get implemented?

It’s complicated, but the primary reason is corporate greed. Huge tax preparation companies like Intuit (creator of Turbo-Tax) and H&R Block would lose billions.

For this reason, they spend millions of dollars lobbying Congress against any simplification of the tax code that would result in fewer taxpayers needing their services.

Another argument is put forth by anti-tax activists like Americans for Tax Reform, who claim this plan would “create a conflict of interest where the Internal Revenue Service would become both tax preparer and enforcer.”