Jonathan Kern is the former editor and executive producer of All Things Considered. He's the author of Sound Reporting: The NPR Guide to Audio Journalism and Production. He pays his taxes in Arlington, Va.
I love tax preparation programs, but I also hate them. I love the way they suck information out of the databases of mutual funds and banks, and put everything in all the right places. I love the way the right numbers almost magically show up in the correct forms. And I especially love it when I get an $800 credit for a stimulus program I'd completely forgotten about.
But I hate tax programs because they make the tax code look positively rational; they take care of the what, but never the why. They're like professional tax preparation services and lawyers and CPAs -- they're all are part of a huge infrastructure that separates taxpayers from the ugly, tangled web of laws that apply to them. The very complexity of those laws and regulations benefits two groups -- those who want to raise taxes, and those who want to avoid paying them.
Most of us who actually pay taxes -- and you're in the group if you make more than $65,000 a year -- just avoid looking into the abyss that is the tax code. For example, the tax program I use asks a few simple questions. Do you own a home? Did you pay mortgage interest? Did you have Social Security income? I answer the questions, and it tells me what my taxes are. It hides the arcane, convoluted tax filing process that the government has created, and that any normal person would recoil from.
For example, when I did my father-in-law's taxes this year, I entered his Social Security income, and the program determined what portion of it is taxable.
Here's what the IRS form actually asked me to do. And this is only a summary ...
Insert the amount of Social Security income.
Divide it by two.
Add that and the amounts on lines 7, 8a, 8b, 9a, 10 through 14, 15b, 16b, 17 through 19, and line 21 of Form 1040. Also include income from bona fide residents of American Samoa or Puerto Rico!
Subtract $25,000 from the result.
Subtract $9,000 from that.
Divide $9,000 by 2.
Compare some of the results.
Then multiply the number you got several steps ago by 85 percent.
That's the amount that's taxable.
With the government facing bigger and bigger deficits, the taxpaying part of the population is almost certainly going to have to pony up more.
These people deserve to understand how and why they're being taxed. And that means simplifying the whole tax code.
Which is why I hate tax programs. If there's ever going to be a real impetus for tax simplification, people may need to endure the experience of following the byzantine instructions on the tax forms. Try it once without a CPA or tax program. It's frightening. Heck, the instructions for the 1040EZ -- the simple version of the tax return -- are 40 pages long!
It's time to demand something simpler, fairer -- and especially, more rational.