Tax Analysts Blog

Tax Day Is a Drag. Should We Keep It That Way?

Posted on Mar 27, 2017

No one likes to file their tax return. The process is tedious and confusing – unless you hire someone to do it, in which case it’s expensive. And even when we outsource the misery in April, we still have to collect and organize tax-related documents all year long.

It’s a drag. And at least some commentators think it should stay that way.

Conservatives are the most ardent fans of making taxes painful. When he was governor of California, Ronald Reagan opposed a plan to simplify filing, arguing that  “taxes should hurt.” 

That attitude makes sense, if you think America needs a tax cut: Painful taxes are a good way to recruit allies. Which is one reason why conservatives – who should actually welcome the relative efficiency of broad-based, low-friction consumption taxes like a VAT – actually prefer less efficient alternatives like the old-fashioned, irritating personal income tax.

In a recent piece for Reason.com, Veronique de Rugy,  a senior research fellow at the Mercatus Center at George Mason University, makes a solid conservative case for tax discomfort. Tax day, she points out, is “the one time during which many taxpayers are confronted with just how much of their earnings are captured by the government.”

De Rugy opposes efforts to minimize the misery of filing a return, specifically proposals that would require the IRS to send taxpayers a pre-filled return to double check and return to the agency. She’s also not a big fan of withholding, since it, too, tends to separate  taxpayers from the actual process of paying their tax bills.

“We don't need taxpayers less involved in funding the government,“ de Rugy writes. “For those with the goal of shrinking government and reducing taxes, the aim should be the opposite: to make the costs of big government clearer to those who carry the burden of funding it.”

Actually, I think there’s a good case to be made that fans of big government should also be wary of making taxes less visible. For most of the last 40 years, liberals have been unwilling (or unable) to make a persuasive, straightforward case for adequate taxation. On the defensive since Reagan recast American politics in 1980, they’ve tried to build activist government on the sly, using tax expenditures or narrowly targeted tax hikes on the rich. 

That’s fine, as long as you harbor narrow, Clintonian notions of what constitutes progressive government. But grander ambitions require broader, more visible forms of taxation.

If liberals want to build a new majority, they have to make the case not just for spending, but also for the taxes that pay for it. Failing to make that link does serious damage to the progressive cause, devaluing government and conceding a central conservative point: Big government is great, as long as someone else (or no one else) is paying for it.

To be fair, the liberal reticence regarding taxes has begun to change, thanks in no small part to Sen. Bernie Sanders, whose presidential campaign didn’t shrink from asking people to pay for new spending

But Democrats still have a long way to go. Ringing calls for higher taxes on the rich are nice and all, but when divorced from any sort of fiscal sacrifice further down the economic ladder, they actually weaken the case for progressive government.

But what about the pain of the taxpaying process? Is our annual April misery a necessary part of progressive state building? I don’t think so. There are ways to preserve the visibility of taxpaying and still make the process a little less irritating, at least for many taxpayers.

In a great NPR feature this week, Stanford law professor Joe Bankman  made the case – as he has for years – that pre-filled returns would be a godsend to taxpayers. Such returns would be low on misery but still offer taxpayers a snapshot of their fiscal citizenship.

Sure, that snapshot wouldn’t be as memorable without the hours of preparation misery that taxpayers now tolerate. But it would still offer taxpayers a chance to check over their fiscal contribution – and provide an incentive for them to look carefully, since real dollars would still be on the line.

In defending low-friction returns, Bankman makes an impassioned case rooted in the sort of fiscal citizenship that Democrats sorely need. His vision includes a vital element of reciprocity between the taxpayer and the state.

“Filing taxes is one of the most important interactions you’ve got with your government. How do you feel about government if [doing your taxes] makes you feel pissed?” he asks.  “So changing that would affect the way we think about government and our joint undertakings. It would show that government cares about you.”

To my ear, that sounds like a recipe for progressive victory. Or at least the first ingredient.

 

Read Comments (4)

Travis RechMar 27, 2017

I'm a huge fan of ready returns or whatever method you call pre-prepared returns the IRS requires you to double check and return. It would eliminate the burden for the middle to lower class taxpayers who have uncomplicated returns. Unfortunately, this reform is opposed by the often predatory tax preparation industry who lobby hard to keep simple returns as complicated as possible. This really ought not to be a progressive or conservative issue, since its a problem created and perpetuated by and for lobbyists to sustain an industry that is a drag on the economy.

Lastly, De Rugy is a bit nuts. Without withholding non-compliance would skyrocket. The IRS doesn't have the budget to pursue collections cases against millions of households who would no longer have w-2 withholding. Nor would giving them that budget be a good use of funds. Creating a problem out of thin air and then paying handsomely to solve it all in the name of furthering an anti-tax ideology is quite strange. Government has enough legitimate problems conservatives can point to; conservatives do not need to waste their time and our money conjuring new problems in order to paternalistically teach us the pain of taxation. It would be like finding out the American Cancer Society is encouraging more Americans to contract cancer because that would be a great way to raise awareness of cancer.

Mike55Mar 27, 2017

"This really ought not to be a progressive or conservative issue..."

100% agree. It appears Edmund and Prof. Thorndike do as well, so I think we've proven at a micro level this is not a question of ideology. I suspect the four of us would never reach agreement on how those hypothetical pre-filled returns should be presented, but their initial existence ought to be a given.

Edmund DantesMar 30, 2017

Certainly I agree with you that we must preserve withholding, for all the reasons you stated.

However, may I suggest that the practice of overwithholding has become a new problem. Because most people receive tax refunds, identity theft has become a major issue. My coworker was recently informed by the IRS that her identity was stolen, putting her in to that bureaucratic nightmare.

I believe that we should be encouraging slight underwithholding, so that refund checks become the exception instead of the rule. Taxpayers should have 90% of their taxes withheld, and the last 10% paid on April 15. Current tax law imposes penalties for such, and so should be changed.

Edmund DantesMar 27, 2017

I like the idea of an IRS pre-filled tax form. As an intermediate step, how about if I could look up my account at IRS and review what info they have on me?

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