I completed my taxes this morning.  Or, at least I did for now.  Quarterly filing means I have to spend a few more frustrating hours on the activity this year.  I had hoped that the time would be less than twenty hours, but guessed thirty.  That is about how many it took.  The final frustration was that, for whatever reason, my Acrobat Reader seems not to be able to download the quarterly estimated filing forms.  I'll have to stop at the library to pick them up.  All this effort and we owe the IRS $757 for last year.  Most of this was for wage tax.  It is now 15%.  Is it any wonder most people don't save anymore or that so few work?  Still, with this tax, Social Security should be rolling in dough.  We know it is not.  The idea was a good one, but sadly the government turned a simple old-age insurance program into the largest Ponzi Scheme in history.  I am doing my best to cash out before the bottom falls out.  Still, we just paid in $656 and have not  collected a cent.  We are probably twenty years too young.

Our actual income tax for last year comes out to $101, and this is where most of the hours went in.  Why so much time?  Because the Congress is schizoid with regard to taxes.  It has to bring in income, but it wants taxes to be "fair."  It also wants to "encourage" certain behaviors, among them saving for such things as retirement, education, and health care.  Unfortunately saving makes one wealthy and the wealthy have money to pay more taxes, and Congress twists the tax code to make them do so.  All this leads to a witches brew of a tax system that is irrational in itself and pushes the taxpayer to adjust their behavior to the tax code because taxes much more affect our cash for spending than does income.

What is a fair tax.  Clearly we all benefit from the government.  So, we should all pay a tax.  But, some are wealthier, have more income, property, or savings.  Should these pay more?  Probably not, though some make a case that the rich benefit more from government services such as law and order or national defence.  Perhaps, but they are much less likely to receive food stamps and entitlements that make up the bulk of federal expenses that don't go to the national debt.

Still, the do-gooders argue, the rich should pay more.  OK, but how much more?  Should they pay 10% more or twice as much?  No the argument once went, they should pay in proportion to income.  That obsencely means that a person who earns ten times as much as another pays ten times as much.  The problem with this is two-fold.  It provides too much money to the government and it makes government profoundly undemocratic.  If the rich pay for government, don't the rich own it?

If a tax in proportion to income was bad, today it has become enormously worse.  The rich pay a much higher rate on their income and so are encouraged not to earn it.  Earn what you need and drop out becomes a reasonable strategy.  We are following it.

As taxes grew, workers ceased to save.  How can one save when the government taxes 15% directly out of earnings?  The government realized that this was a problem.  Especially since the government old-age plan was a Ponzi Scheme and was never intended to be a complete retirement plan, something had to be done to get people saving again.  There have been a multitude of solutions.  These have included IRS's, 401K's, 403B's, etc.  The view was that people would save to avoid income taxes now, and the government could nail them with taxes when they cashed out of these savsings accounts later.  This has worked to some extent, but mostly only the rich use these devices.  Why?  Because the tax system has become so "fair" that most with a low income pay scant tax and don't bother.  Saving subjects them to more tax.

Congress cannot simply stop itself from taxing savings.  Now, there is even discussion of imposing wage taxes on savings.  Of course, initially this will be done "only to the wealthy."  That was once the case made for the "income tax."

So, today we have a tax code that has provisions for savings and for a zillion other things that Congress supposedly wants us to do.  We may deduct for contributing to our church or the Red Cross, for paying mortgage interest, and, apparently, for providing housing to a displaced Midwestern individual.  See line no. 42.  Sadly we the people have created this monster.  It is fair only to those who boldly say yes, I housed a displaced Midwestern individual.  Prove they did not.

So many interest groups - all of us - studidly think we benefit from this grotesque and unfair system of taxation that it will not be undone or simplified until it collapses of its own weight.  We are addicted to it and no politician speaks of changing it.  We can only hope for change.