Michelle Singletary

A clarion call for simplifying the US tax code

Tax forms put out for the public each year can fill many shelves.
John Tlumacki/Globe Staff /File
Tax forms put out for the public each year can fill many shelves.

It’s not nice to tell people “I told you so.” But if anybody has the right to say that, it’s Nina E. Olson, the national taxpayer advocate.

Olson recently submitted her annual report to Congress, and top on her list of things to fix is the complexity of the tax code, which she calls the most serious problem facing taxpayers.

Let’s look at recent evidence of complexity run amok: The Internal Revenue Service had to delay the tax-filing season so it could update forms and programming to accommodate recent changes. The IRS won’t start processing individual income tax returns until Jan. 30. Yet one thing remains unchanged: the April 15 filing deadline.


The IRS said changes could result in some people not being able to file returns until March.

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Because of new tax laws, the IRS also had to release updated income tax withholding tables — replacing the tables issued Dec. 31. Yes, let’s keep making more work for the agency. Not to mention the extra work for employers, who have to use revised information to correct the amount of Social Security tax withheld in 2013. And they have to make that correction in order to withhold a Social Security tax of 6.2 percent on wages following the expiration of a payroll tax cut in effect for 2011 and 2012.

Oh, and there was a near miss with the alternative minimum tax that could have delayed tax season to late March. The AMT was created to target high-income taxpayers who were claiming so many deductions that they owed little or no income tax. Olson and many others have complained for years that the AMT wasn’t indexed for inflation.

The AMT is now fixed, a move the IRS was anticipating. It had already decided to program its systems on the assumption an AMT patch would be passed, Olson said. Had the agency not taken the risk, the time it would have taken to update the systems “would have brought about the most chaotic filing season in memory,” she said.

The tax code contains almost 4 million words. Since 2001, there have been about 4,680 changes, or an average of more than one change a day. What else troubles Olson (and most of us)?


Nearly 60 percent of taxpayers feel they must hire paid preparers, and another 30 percent rely on commercial software.

Many taxpayers don’t really know how their taxes are computed and what rate of tax they pay.

The complexity of the tax code makes fraud harder to detect.

Because the code is so complicated, it creates an impression that many taxpayers are not paying their fair share. This reduces trust in the system and perhaps leads some people to cheat. Who wants to be a sucker? Some might not declare all income, rationalizing that millionaires get to use the convoluted code to greatly reduce their tax liability.

“I hope 2013 brings about fundamental tax simplification,” Olson pleads in her report. She urges Congress to reassess the need for tax breaks — the exclusions, exemptions, deductions, and credits. It’s all these breaks that complicate the code. Tax rates could be substantially lowered in exchange for ending tax breaks, she says.


But of course it’s not simple. “The perennial challenge . . . is that while most taxpayers support a simpler tax code in concept, many of us are reluctant to give up our existing tax breaks.”