President Trump wants to make the income tax simple again. Unfortunately, it’s never been simple – not in the last year, the last decade, or even the last century. And it’s probably going to stay that way.
In remarks last week, Trump put his finger on the problem. “We must make the tax code as simple as possible,” he declared. “It's extremely complex, it's not fair, and it's extremely hard to understand.”
Trump has been known to pine for a simpler time with simpler taxes. “In 1935, the basic 1040 form that most people filed had two simple pages of instructions,” he recalled last month. “Today, that basic form has 100 pages of instructions, and it's pretty complex stuff.”
Trump is right: Tax forms and their instructions used to be shorter. But that doesn’t mean they were simpler. In fact, taxpayers have been complaining about complicated forms, instructions, and everything else for more than 100 years.
The griping actually started before the income tax was even on the books. Congress enacted it in late 1913, but even as they were drafting the legislation, critics were piling on. "Some of the efforts of the lawmakers at Washington to express in intelligible and legally binding English their ideas of what they want to enact are nothing short of pathetic," complained The Wall Street Journal.
In fact, the Journal was using the prospect of a new tax to drum up sales for its explanatory series on the legislation. "Do you understand the income tax bill?" the paper asked in promotional material. "If you do not, this will tell you how you may learn all about its many intricacies, the infinite confusion it will cause, its possible unconstitutionality, and its injustice."
Things didn’t get any better once the tax was on the books. In its early years of operation, the income tax drew ample scorn. “Why can't we have a simpler method?" asked The New York Times in 1920. "What are the excuses given by members of Congress for the complications? Will they try to simplify the procedure?"
In fact, members of Congress were themselves confused by the law. “I guess you will have to go to jail," wrote Sen. Elihu Root to a worried correspondent in 1913. "If that is the result of not understanding the Income Tax law I shall meet you there. We will have a merry, merry time, for all our friends will be there.”
Root understood a hard truth about the income tax: It’s complicated and likely to stay that way. Even the biggest fans of taxing income have acknowledged that it is inherently complex.
Rep. Cordell Hull – sometimes called “the father of the income tax” in recognition of his pivotal role in drafting the 1913 law – put the matter simply: "It should be remembered that an income tax is in its character a complex and intricate matter,” he said, “because it deals with business which grows more and more complex."
Over the last 100 years, Americans learned to live with that sad reality – but they’re still not happy about it. Indeed, when Trump calls for simplification, he’s speaking for many of his constituents. In a recent poll by the Pew Center, 43 percent of Americans said they were bothered by “the complexity of the tax system.”
But here’s the problem: Many people want a simpler tax system, but they want other things even more. Specifically, they want the tax system to be fair.
In that same Pew Center poll, complexity was actually third on the list of tax complaints. The first two (polling 62 percent and 60 percent, respectively) were “some corporations don’t pay their fair share” and “some wealthy people don’t pay their fair share.”
And that’s the heart of the problem—making sure that companies and individuals pay “their fair share” usually involves some measure of necessary complexity.
Which is not to say that tax reform can’t make a bad situation better. The income tax could certainly be made less complicated than it is today. But it’s unlikely to ever be truly simple. Even the famous tax reform of 1986 – the aspirational model for today’s reformers – didn’t really make the tax system much simpler.
For what it’s worth, fans of taxing income have generally been OK with complexity. Cordell Hull, for instance, agreed that baby steps toward simplification were a good idea. But ultimately, he believed taxpayers needed to just suck it up. "If each one reads the instructions first, carefully, there would not be much difficulty now," he sniffed in 1920.
Politicians used to be more candid with their constituents.
For more on the history of tax complexity, visit the Tax History Project at Tax Analysts.