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Why Are Taxes So Complicated?

Tax is simple in theory. The government keeps things in check, oversees regulations, and enforces the law. Since they don’t make money directly, a tax is added to the cost of goods, exchange of services, income received, etc. to pay for the service they provide,

This not only covers government costs, but pays for local resources and infrastructure, from police forces to roads and more.

You may not like it, but to support a civilized, governed society, you could say taxes are a necessary evil.

But Somewhere Along the Way, Taxes Became Very Confusing

In 1913, the Federal Tax Code was about 400 pages long. That might seem like a big document, until you hear what it’s current size is. Today, the Federal Tax Code is 74,608 pages.

Think about just how big a 74,608 page document is.

To put it in perspective, let’s take a look at the Bible (because when people think of really long books, The Bible is usually up there). The average length of a Bible is 1200 pages. The Federal Tax Code is the length of 62 Bibles.

Crazy, we know.

How Did Taxes Get So Complex?

Like most things relating to taxes, the question of tax complexity has no simple answer.  Tax laws are written to promote fairness. Because people’s lives and social standings vary wildly, tax code must account for the variations. The same goes for businesses.

Taxes are also used as a means of influencing best practices.

The government tries to promote practices and technology that benefit modern society while deterring outdated and harmful methods. Tax code is used to reward and penalize accordingly.

Tax code must be enforceable, and so it’s written very thoroughly to avoid potential loopholes. If loopholes or sources of abuse are discovered, additional code is added on. While adding on laws and additions creates a longer, more complex tax code, it’s likely to create less issues than changing what’s already there.

Tax code is very interconnected, and so, changing one part could start a domino effect.

When new policies and laws are added, the tax side of them generally isn’t planned out. That means it’s up to the IRS to then account for any tax conflicts, once again adding complexity.

Why Don’t Politicians Try and Change This?

Almost everyone on both sides of the politics agrees that our tax system is overly complex. But when it comes to actually simplifying it, few are interested. Instead, they focus on tax reductions for certain people, increasing accountability of those underpaying, or how tax money can be used differently.

This inevitably makes taxes more complicated, not less.

Taxes Will Likely Never Be Simple

Chances are, our tax code will only continue to grow. The best way to keep up is to utilize a tax professional. We stay up-to-date on the latest changes and tax laws to ensure you don’t pay more than you should.

For tax and accounting help in Springfield, Ohio, LWS has you covered. Contact us today!

Posted by admin | in Business Tax, Individual Tax