A new tax bill has been introduced which proposes an odd mix of changes to the tax code while legalizing some things and escalating the criminality of others. The so-called Bipartisan Tax Fairness and Simplification Act of 2010 (S. 3018) has been introduced by Senator Wyden (D-Oregon) and co-sponsored by Senator Judd Gregg (R-New Hampshire), which claims to make the tax code “simpler, fairer, and more fiscally responsible.” While parts of this bill make sense, I don’t think that the bill necessarily deserves it’s self-given description as simple and fair. Of course, as one of the few democrats who supports converting to a flat tax system, some might say my view of what constitutes a simple and fair tax proposal is more extreme than the average Washington bureaucrat.
If the government must continue down the path of trading one complex system for another, then the bill includes some good proposals, some bad proposals, and some that are rather still vague or indecipherable when one tries to figure out how they would be implemented. It includes the elimination of subsidies to oil companies for deep-sea drilling research, taking away the tax deduction companies currently get for paying punitive damages (yes, punitive damages are tax deductible – you don’t hear about that little corporate gimme when they lobby for “tort reform”), dumping the alternative minimum tax, imposing taxes on employee fringe benefits, reducing corporate tax rates and reducing the number of individual tax brackets, eliminating the tax deduction for moving expenses, removing the deferral of taxes on U.S. savings bonds, and eliminating the tax exemption on municipal bonds.
Receiving less attention are the provisions to legalize internet gambling while simultaneously escalating the already out-of-control power of the IRS to prosecute US citizens over tax problems. Americans would now be able to engage in internet gambling without worrying about being hit with a federal indictment, but would be subject to even more outlandish criminal prosecutions for violation of the tax code than already exist.
Not surprisingly, the provisions legalizing internet gambling have garnered the endorsement of the Poker Players Alliance. The provisions expanding criminal prosecutions earned the bill a spot on the Heritage Foundation‘s bulletin Overcriminalized.com. The rest of the provisions are being widely endorsed or criticized, depending on which pet issue in the legislation affects one’s financial or political interests the most.
I doubt that this bill will pass, at least not in its present form, because there are too many provisions affecting too many interest groups with powerful lobbies. But as the government falls deeper and deeper into debt, it will take increasingly desperate measures to get its hands on more and more money from it’s only source of revenue that can’t fight back – you. If you don’t have an influential lobbyist working for you, expect big problems over the next few years. Before Joe Stack’s suicide by crashing his plane into an IRS building, a Google search for the phrase “IRS suicide” provided page after page of horror stories of how the IRS already abuses its power. Now you have to go past pages and pages of articles about him before you get to the less spectacular but sad stories of ordinary Americans who have been crushed by the machinery we call the government. We should all be alert against legislation that proposes some good ideas under the guise of simplifying the tax code without actually simplifying anything and while hiding away subtle provisions that would make more good people into felons. While the current laws against internet gambling are ridiculous and need to be repealed, that repeal does not need to be coupled with branding more struggling Americans as tax cheats and felons.
Yes I know I’m all over the place with this post, but I’m tired, I need more coffee, and I’m thinking about that PITA tax return I’ve got to fill out soon. I’ll go eat a donut and see if I can use the sugar rush to write something more amusing.
To download a pdf of the proposed legislation, click here: bill_draft
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