IRS Tax Problems

Why People Hate Taxes, & How to Learn to Hate Them (A Little) Less

by
Bob Mason
on
1/15/2020
Why People Hate Taxes, & How to Learn to Hate Them (A Little) Less

Note: The tax filing and payment deadline for 2019 tax returns has been delayed from April 15, 2020 to July 15, 2020.

As another tax season kicks off in the new year, people excitedly talk about what they're going to buy with their refunds — or gripe in anticipation of owing money. The tax man definitely gets no love in the United States. Just say "IRS," and you can strike fear into the hearts of even the toughest of American taxpayers.

The portrayal of the IRS in media over the years has taken the shape of an unfeeling entity that wantonly seizes people's assets is somewhat skewed. In reality, it's actually state tax authorities who taxpayers should really be afraid of because of lack of due process, but the public finds it plausible no less. People hate paying taxes, but Americans specifically resent the notion.

Why is this? How is it that Americans have such an aversion to paying taxes in comparison to other OECD countries?

Opacity and Complexity of the Tax Code Itself

Americans have a tendency to riff on things they don't understand. Taxes absolutely rank up there, given the rampant over-complicatedness of the Internal Revenue Code.

The tax code is purported to be 5.6 million words long, and it only gets more convoluted every year with new updates. Even without gigantic reforms like the Tax Cuts and Jobs Act of 2018, provisions are constantly added or removed from the tax code. Figures update, categories expand, credits expire. It's nearly impossible to keep up with, and an entire profession had to be dedicated to tax matters because it gets so out of hand.

In comparison, countries like Japan and the Netherlands use "pre-filled" tax postcards that detail how much income tax was withheld, and people are invited to go to the tax authority's office if they disagree with the amount. Even if their income is more complex, such as for business owners or those with investment income, taxpayers receive these postcards for expedited tax filing with minimal headaches for both sides.

The need for a multibillion-dollar tax preparation industry just doesn't exist in many other developed countries. It makes even less sense given that the IRS receives copies of forms like W-2s and 1099s for investment, retirement, and some self-employment income, and it would save hours of paperwork to reconcile a pre-filled tax return for people who are self-employed or otherwise don't have all of their income automatically reported to the IRS.

Local taxes are another nuance. States levy their own income taxes, as do some counties and cities. Sales tax, excise tax, and estate and gift taxes are also administered at the local levels. This only compounds the complexity of federal taxation and makes people feel resentful about paying more taxes in one state than another. Sometimes locations that are geographically close together, such as parts of the New York City metropolitan area, can have different state and city tax rates. People living in these areas could move a few miles and be slapped with a larger tax bill than they had before.

What Our Taxes Actually Pay For

Then it boils down to what our taxes actually pay for. To get people to hate taxes less, it comes down to pointing out the overt and less obvious things taxes do pay for, such as:

  • Roads and infrastructure
  • Food and drug safety
  • Postal service
  • Libraries
  • Public schools
  • Social programs
  • Other vital public institutions

Ensuring that taxpayers are regularly reminded of these basic uses for their tax dollars might make the pain of paying them just a little bit lower.

Bob Mason, CPA writes for TaxBuzz, a tax and accounting news and advice website. Reach his office at [email protected].  

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Bob Mason

Bob Mason

Bob Mason is the founder of Coast Financial Services Inc. servicing both the Santa Cruz, and San Jose areas. Bob Mason is a skilled financial professional who is fully equipped to assist any of your accounting needs. Founding his firm in Santa Cruz, Bob understands the importance of small businesses and how they form the backbone of the area. Coast Financial Services, Inc. has been dedicated to the growth and profitability of businesses in Santa Cruz for 17 years. To learn more about Bob Mason and the rest of his team, visit their website.

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