Pleasures of giving to my favorite charity
Few things give me pleasure like writing checks to my favorite charities, namely the US Treasury, the Wisconsin Department of Revenue, the California Franchise Tax Board but, alas, not the Michigan Department of Treasury who had the decency to overcharge me $10 during the year and will be writing me a check. Provided, that is, that I have understood the arcane language of tax forms and have filed correctly and Mars was not retrograde while I ran H&R Block TaxCut which gave me the federal numbers that give me the out of state numbers that give me the in state numbers that give me the Michigan taxes due. So this has not been a great year for finances and employment and you would think that a virtual vagrant like me who very nearly (but not quite) earned the median household income for the US or, roughly 67% of the household income for the region I livein, would have simple taxes. I know that when I was younger and made no money, much like this year, I filed those EZ forms that were a page long and I was done. This year, my Wisconsin envelope has a whopping nine pages (since they require a copy of your Federal return) followed by the Feds and Michigan (5 each) and finally by California, God bless California, with it’s slim two pages plus Schedule S for a whopping 22 pages. This does not of course include worksheets for Schedule this and Schedule that which double the number of pages actually filled out. I know of Ph.D. theses in math that required fewer pages than that! It also does not include a dozen copies of W2 forms, or three checks for a total of $3009 sent off to my favorite charities, being a tax and spend liberal, of course.
Forgetting for a moment where this money goes and what it does for good and ill, the process is amazing in many respects. First of all, it is utterly incomprehensible. Despite my best efforts, my return is almost always corrected by at least one agency. Now I can read and, having edited some difficult books and written a doctoral dissertation and a handful of articles, one might suspect that I can read as well or better than the average American, but apparently not well enough to decipher the tax booklets. This doesn’t bother me that much because there is a magazine that every year gives a reasonably difficult but not atypical client to twelve accountants and an IRS auditor. The last time I saw the results (I forget if it was for 2004 or 2003), the result of this experiment was, as it is most years, that the 13 professional tax preparers came up with 13 different numbers. That is surely a sign that the system is broken.
I know that tax reform is unlikely given all the competing interests (accountants and H&R Block don’t want the code simplified and every interest group defends its deductions and exceptions). However, I find it remarkable that I can’t just go to some website, put in my numbers, and have it all done. I can, you say? Not on your life. I can go to a website and if I’m lucky enough to make less than $50,000 (alas, I am *so* lucky) and have a fairly simple return (that luck, however, is not mine), I can file my *federal* return for free. Then I have to pay for each state return. So two questions: 1) Why does the government tacitly sponsor loss-leader free tax prep software from private corporations as a come-on to get me to upgrade to the version that will actually give me better advice and then pay to file my THREE state returns? and 2) Why do I have to enter the same damn numbers four times? Can’t someone come up with a system that just figures out I have income from three states, but only have one address and take it from there? If the government can’t provide software that is compliant with its own tax law, why not? How much is spent on printing then mailing those damn books around the country? Couldn’t we just do away with 80% of those and put the money into software that was freely available and then be done with it.
Of course, the current tax system and software are a disaster, so maybe a software solution is the wrong answer. According to the fascinating chart at the end of this year’s 1040 instructions, on average it takes 21.8 hours to prepare your taxes using software and 16.1 hours without. If your return is complicated, then it takes 27.5 hours without software and a whopping 37.8 hours with. That means that people are spending the equivalent of an entire work week preparing their taxes, of which more than a full day seems to be due to the complexities of using software. This seems incredible, but there it is in the IRS’s own study results. Personally, I would have rather spent the last two days skiing or watching reruns of the Simpsons on DVD (courtesy my niece and nephew). Bad enough that I had to write checks totally $3009, but I also had to spend two days pulling my hair out to do it. Usually when I spent three grand… oh forget it, I don’t ever spend three grand except on my favorite charity.
Meanwhile, my friend Nick got a threatening letter at my house (long story) saying that if he didn’t pay $23.70 to Blockbuster by tax day, bad things would happen to his credit and I couldn’t get in touch with him. So I decided I could partly redeem the day by gifting $23.70 to Nick and at least feel good about one thing I did today.
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