The tax code is a target-rich environment. It’s complicated. At approximately 4 million words, it’s lengthy. With its carrots and sticks, it’s a manipulative social engineer’s dream. It often demands less of those most able to afford to pay taxes.
Perhaps worst of all, the federal tax code generates bipartisan bloviating. Republican and Democratic politicians’ campaigns are littered with promises to reform the tax code. Their track record of success rarely lives up to the campaign rhetoric, however.
The secret is that while the tax code may have Americans’ full attention today, others in Washington are thinking about it 365 days a year, often in ways at odds with the desires of most middle-class Americans.
Sure, the senators, representatives and president oversee the tax code — one of the key jobs we sent them to Washington to accomplish — but they are nowhere near the full-strength of this army. Lobbyists, policy advocates and other representatives of special interests are alongside our elected representatives. These foot soldiers are there to make sure the tax code favors their constituents. In fact, those special interests have lawmakers greatly outnumbered in D.C., to the tune of 25 lobbyists for every member of Congress.
From the perspective of outsiders looking in, the British-based Economist magazine succinctly put it this way, “Many Americans believe, not unreasonably, that far from acting always as an instrument that serves their interests, government often acts as if citizens’ lives and labor are instruments to the special interests that control government.”
Well, you don’t say.
Hence, it’s no accident that the tax code is so long and complicated; it’s filled with special breaks for businesses and individuals. In this way, the tax code is operating precisely as it was set up to perform.
Politicians seeking to vote on tax policy run for office. A political campaign costs big money so they have to keep their hands out. Special interests are happy to fund those campaigns so long as the politician understands how he or she needs to vote. The winning politician goes into office remembering who his benefactors are; forgetting is a ticket to a single term. Those elected representatives are free to grouse about the tax code so long as they remember to not let the bluster into policy that harms their contributors.
In theory, a simpler tax code would be easy to create. It would (a.) raise enough money to pay the government’s obligations; (b.) progressively tax Americans so that those most able pay a higher rate; and (c.) contain a few big-ticket exemptions to encourage universal goods like home ownership, savings, education and stable families. Before that can happen, the nation will need to reform its pay-to-play campaign finance system.