The Tax Code Nightmare Continues

Money, a personal finance magazine, periodically used to conduct a test by sending a hypothetical family’s tax information to dozens of professional tax preparers, an exercise that generated a wide array of results because of the tax code’s complexity. Unfortunately, it seems Money no longer conducts this test. But USA Today has stepped up to the plate, albeit in a more limited way. It asked for a tax return from four preparers and got - gee, what a surprise - four different results:

In 1913, the CCH Standard Federal Tax Reporter, which spells out the U.S. tax code in all its riveting detail, was 400 pages long. In 2007, it contained 67,204 pages. As the tax code turns ever more unwieldy, deciphering it has become more art than science, tax experts say. With the April 17 deadline approaching, USA TODAY decided to test this theory by asking three veteran tax pros — two enrolled agents and one certified public accountant — to prepare a tax return for a hypothetical family, the Baileys. …All the preparers came up with varying results.

To its credit, USA Today draws the obvious conclusion and denounces the current tax code. Unfortunately, other than making some generic comments about the need for reform, the newspaper does not explain why fundamental reform like a flat tax is the only solution:

The fact that they couldn’t agree is testament to how impossibly complex the tax code has become. It also illustrates the utter contempt Congress has for the Baileys and their real-life contemporaries. This year, individuals and companies will spend about $300 billion, according to the non-partisan Tax Foundation, on tax preparation costs. To put that in perspective, that is a 20% levy on top of the $1.5 trillion they will actually pay in taxes. Some 60% of filers — including IRS Commissioner Mark Everson — will pay a professional to do their taxes for them.