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It is a timeless truth. As a tax assessor under Ivan the Terrible, one of the ruthless oprichniki, recorded in his diary: "I did no harm to anyone today; I was resting."
Taxes destroy in many ways. When they are too high, too intrusive, or too complex, taxes can destroy businesses, jobs, and the value of work. They can destroy incentive, innovation, and success. They can destroy prosperity and peace of mind.
High taxes destroy choice and opportunity. The more of their earnings taxpayers must fork over to federal, state, and local governments, the less they retain to spend on their own priorities. According to the Consumer Expenditure Survey compiled by the federal Bureau of Labor Statistics, Americans on average pay more in total taxes (based on 2018 data) than they pay for food, clothing, health care, electricity, and cellphone service — combined.
Taxes most assuredly destroy time, as many of us, struggling to complete convoluted tax returns, are annually reminded at this season each year. (The deadline to submit individual tax returns is normally April 15, but for the second consecutive year it has been postponed until mid-May.) The Internal Revenue Service calculated in 2016 that compliance with tax filing requirements for individuals and businesses would devour more than 8.9 billion hours — the equivalent, as the Tax Foundation observes, of "nearly 4.3 million full-time workers doing nothing but tax return paperwork." What a colossal waste of human energy and brainpower!
And then there is the dreadfulness of the IRS itself.
In 1997, I wrote a column on that very subject in the form of a letter to Ann Landers. The legendary advice columnist had responded to a disgruntled taxpayer with what I thought was undeserved sympathy for the federal tax agency, and I decided to set the record straight:
Dear Ann Landers:
You certainly went easy on the Internal Revenue Service in your recent reply to "Los Angeles Taxpayer." Maybe you were simply being prudent. Because frankly, Ann, if your gentle words about the IRS were sincere, you need a reality check on just how incompetent and abusive Uncle Sam's tax agency really is.
"Los Angeles Taxpayer" wrote to you with a tale of red-tape madness. It began in March 1995, when he mailed his tax return with a check to the IRS. Soon afterward, he was told the check had not been received and was advised to put a stop-payment on it. After he did so, the IRS found the check, tried to deposit it, and then sent it back — stamped "payment stopped." When he sent a replacement check, the IRS applied it to the wrong tax year.
Meanwhile, the IRS mailed him a refund check, then mailed him a letter asking for the refund check back, then mailed him a Form 3911 to report the refund, and then mailed him a letter announcing that his "claim for a refund" would take nine more months to process. All the while, L.A. Taxpayer kept trying to tell the IRS that he wasn't owed a refund in the first place.
"Frankly," he wrote to you, "I'm afraid to send in my next tax check. They should change their initials from IRS to MESS."
In your column, you replied: "Considering the number of returns it processes and the mistakes people make when filing their returns, it's a miracle the IRS doesn't screw up more often." When I saw her words, I was flabbergasted that she would give the tax bureau the benefit of the doubt. I figured it would be a public service to knock the scales from Ann Landers's eyes:
Wake up and smell the java, Ann! The IRS does screw up more often. It screws up constantly. You should have told L.A. Taxpayer to be grateful that all he has to worry about is a nonexistent refund check. Screwups? How about the 3,000 people notified by the IRS in 1993 that they each owed $4 billion in back taxes? How about the Philadelphia chemical firm that was penalized nearly $47,000 because the IRS determined that its tax payment of $4,448,112.88 was a dime short? How about the 50,000 improper levies annually imposed on individuals and businesses?
The IRS recently spent $8 billion to overhaul its computer programs. What it got for all that money, a top official recently admitted, are systems that "do not work in the real world."
Ann, you have no idea how arbitrary and heavy-handed the IRS can be. The federal tax agency sends out some 30 million tax penalty notices every year. Nearly half are erroneous. As James Bovard observes in his chilling book Lost Rights: The Destruction of American Liberty , "The proliferation of tax penalties enables the IRS to threaten the average taxpayer with 'massive retaliation' for the slightest error — yet IRS agents themselves are almost never punished for their errors . . . . If a private bill-collection agency sent out millions of unjustified demands for payment, it would almost certainly be prosecuted for attempted extortion."
As the tax deadline approaches each year, the IRS invites taxpayers to call its toll-free number with their questions. When they do, millions are given the wrong answer. Then when they rely on those wrong answers, they are slapped with interest, penalties, and liens on their property! If you had a track record like that, Ann, would anybody still trust your column?
The Heritage Foundation recently compiled nine pages of numbers underscoring IRS ineptitude. A few examples:
• Number of times the IRS gave the wrong answer in 1993 to taxpayers seeking assistance with their tax forms: 8.5 million.
• Percentage of its own budget for which the IRS could not account in an audit by the General Accounting Office: 64.
• Number of correction notices sent out by the IRS each year that turn out to be wrong: 5 million.
• Percentage of revenue returned when taxpayers challenge IRS penalties in court: 40.
• Number of women wrongly fined each year because they got divorced or remarried: 3 million.
• Number of taxpayers whose old age benefits will be cut because the IRS doesn't properly record their tax payments: 10 million.
As the Internal Revenue Code grows ever more dense and complex, it becomes easier for the IRS to find something wrong with any tax return. Every year, Money magazine asks 50 tax experts to calculate a hypothetical family's IRS bill. Every year, nearly every answer comes in wrong. If it's so simple to flummox the pros, imagine how easily Internal Revenue agents can ambush any taxpayer they decide to go after.
So take a few lashes with the wet noodle. Then add your voice to the cry for a simpler, slimmer, saner tax code. . . .
Do it for your readers. Believe me, Ann, they need your help.
A few weeks later, to my surprise and gratification, Ann Landers reproduced most of what I had written in her own widely syndicated column. Then she replied: "Dear Jeff Jacoby: You've made a pretty solid case against the Internal Revenue Service and knocked some credible holes in what now appears to be my rather lame defense. I'm getting out the wet noodle in anticipation of 40 lashes."
Alas, Ann Landers is no longer with us. The IRS, on the other hand, is as entrenched as ever — and the Internal Revenue Code keeps growing longer and more complicated. In 1955, when the modern Internal Revenue Code was new, it comprised 409,000 words. Since then, it has grown to more than 2.4 million words: a sixfold increase. And that's only the basic text of the law. The explosion of rules interpreting and extending the law has been even more massive: There are now more than 7.7 million words of tax regulations.
That's just an estimate. "The most serious problem facing taxpayers is the complexity of the Internal Revenue Code," the Taxpayer Advocate Service reported to Congress in 2008. "The Code has grown so long that it has become challenging even to figure out how long it is." No wonder the overwhelming majority of Americans — 90 percent, according to former IRS commissioner John Koskinen — rely on outside help to get their tax returns prepared.
That's just swell for the tax-preparation industry, and perhaps for those who own stock in Intuit (which makes TurboTax) or in H&R Block. For Americans as a whole, however, the labyrinthine tortures of our tax system are nothing to celebrate. Jimmy Carter was right in 1976 when he called the US income tax "a disgrace to the human race.'' Forty-five years later, it's more disgraceful, and more maddening, than ever.