An inside joke among accountants is that you know you're an accountant when your children think there are five seasons: spring, summer, fall, winter, and tax. As the daughter of a certified public accountant, I can testify that tax season runs distinctly from at least February through April, the time that countless Americans flock to their tax preparers with W-2's, bank statements, and investment reports, begging for assistance to appease Uncle Sam for another year.
However, a broader tax season exists which affects more than just harried accountants and their families. All Americans, whether they know it or not, live through this tax season. Yet most Americans breathe a sigh of relief on April 15 that their taxes are complete for another year, unaware that every bit of their paycheck is still going toward meeting government's demand for the coming year.
Unlike other seasons which end on the same day each year, tax season varies from year to year, yet has stretched over time. This year the last day of tax season, otherwise known as Tax Freedom Day, comes nationally on April 18th according to the Tax Foundation. If you are lucky, you live in a state with a lower tax burden than others, and you've already celebrated the end of tax season. The poor souls in Connecticut, New Jersey, and New York have to stick it out until May.
In 1913, the year that the 16th Amendment opened up the can of worms that allows the federal government to tax personal income, Tax Freedom Day came on January 18. The highest income bracket was taxed at 7% compared to today's 39.6%, and the national debt stood at $2.9 trillion. As of FY2010, the federal government received over 80% of its revenue from personal income and payroll taxes and currently has over $16 trillion in debt.
But isn't there something wrong when Americans spend 25% of the year working to fund the government, and the federal debt is $16 trillion and still climbing?
Unfortunately the problem exists because government views citizens as a never-ending revenue source to fund ever-increasing programs that may or may not benefit taxpayers. Although soaring political rhetoric may cry for everyone to pay his fair share, it's time that the politicians realize that Americans have paid their fair share and then some.
While one can legitimately argue that taxpayers should contribute to fund the common defense and provide a social safety net for the poor, taxpayers should not be called on to waste their money in duplicative programs. One needn't look far to find examples. In fact, the Government Accountability Office released last week its report detailing duplication within the government.
And isn't something amiss when tax code compliance costs have been estimated at $431 billion for 2012?
According to the Internal Revenue Service, almost 70% of tax filings are 1040 forms. That two-page form has an instruction manual of 106 pages! Just how much does it cost you to fulfill your tax obligation? The IRS estimates you'll spend an average of 16 hours to keep up with the paperwork necessary for those two pages and probably spend $270 by the time you submit the form to the IRS.
When federal tax law has expanded by almost 2,000 pages since 2010, is it any wonder that the American Institute of Certified Public Accountants requires its members to take 120 hours of continuing education every three years? What took only 400 pages to explain in 1913 now takes 73,954 pages!
Without a doubt, now is the time for serious tax and spending reform. Organizations both right and left of center, Democrats and Republicans, all admit that our current state of affairs needs to change. We need a tax system of simple, efficient, stable, and low taxes. Such a tax system coupled with reduced government spending will benefit everyone. Our generic tax season will no longer eat up one-fourth of the calendar, and accountants like my dad can actually get some sleep each March!