Tuesday, April 17, 2012

Buffett Rule isn't even the tip of the tax iceberg

Last night the Senate rejected the so-called "Buffett Rule," a bill that would tax all income over $1 million at a 30% minimum rate. (Actually, the Senate didn't vote the bill down; it voted not to bring the bill up for full debate, which amounts to the same thing, except that, by taking the procedural way out, senators could vote for or against cloture and nevertheless take a contrary position with respect to the merits of the Buffett Rule itself, should that become politically expedient.)

Warren Buffett was never confessing to being a tax cheat, of course. He merely pointed out that, because he makes his money from particular kinds of investments, he is taxed at a lower rate than his secretary, who earns a paycheck. Last week, the White House revealed that Mr. and Mrs. Obama paid taxes at a lower rate than the president's secretary, Anita Decker Breckenridge.

But these "revelations," despite all the speech-making and shouting on cable news, are really rather beside the point, as Brett Arends points out in a stimulating post on SmartMoney.com entitled, "10 Things I Hate About Tax Day." An excerpt:
The U.S. tax code is insane and out of control. It's tripled in a decade. It now runs to 3.8 million words. To put that in context, William Shakespeare only needed 900,000 words to say everything he had to say. Hamlet. Othello. The history plays. The sonnets. The whole shebang. But the IRS needs four times as many words?
Why? Why is the IRS Code such a behemoth? You need not agree with every argument or proposal that Mr. Arends makes in the linked post to realize that this is a fundamental problem -- and one not addressed simply by hiking millionaires' tax rates. Even if that's part of a reasonable solution.

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