Tuesday, February 28, 2006

Score yet another 'ease of compliance' victory for the income tax

This story is too much:

H&R Block Inc., which provides tax advice to millions of Americans, made an embarrassing confession on Thursday. It goofed on its own taxes.

The company, which is in the middle of its make-or-break season preparing other people's tax returns, said it had underestimated its own "state effective income tax rate" in previous quarters -- meaning it owes another $32 million in back taxes.

As a result, H&R Block said it would restate previously reported earnings going all the way back to 2004. [James Kelleher, Reuters] [Hat tip: NoodleFood]
The article goes on to describe problems H&R Block has had with its tax software and clients who seek early refunds.

So here we have a tax giant -- a veritable American icon of the tax-filing season -- waylaid by the difficulty inherent in complying with the income tax laws.

I would like to understand why people tolerate such a system. The complexity of the income tax and the billions of dollars in wasted resources spent every year in the impossible attempt to adhere to the internal revenue code ought to make the need for fundamental tax reform plainly obvious to almost anyone. Yet in the face of all this waste and needles anxiety, we still endure the income tax to pay for the cost of our government, with no hope of a respite in sight.

My theory: Washington knows that the power to tax is the power to destroy and that any tax reform which makes the real cost of government plain to the average citizen would be the death-knell of the welfare state. It's that simple. The income tax simply hides the cost of government though its smokescreen of rules and deductions. Our tax laws are a boondoggle dedicated to obfuscation, not efficiency, and the majority is too ignorant to do anything but suffer though it.

So much for a nation whose founders dumped tea in Boston Harbor rather than abide an unjust tax.

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