The Wall Street Journal article indicated one proposal under consideration would exempt up to 40% of Americans from having to file a tax return. After contacting the article's authors, I learned that the plan was written by Austan Goolsbee and adopted by the Obama campaign.
Titled "The Simple Return" plan, the proposal would not actually exempt up to 40% of Americans from filing a return. Rather, it would make it so the only action required by the average taxpayer would be "checking the numbers, signing the return, and then either sending a check or getting a refund."
A few of the key points in the plan:
- The proposal assumes the tax law remains as is, with the same mass of deductions, credits, exemptions, and so forth.
- The program would be voluntary. Anyone who preferred to fill out his own tax form, or to pay a tax preparer to do it, would just throw the Simple Return away and file his taxes the way he does now.
- The IRS would prepare a "Simple Return" with the data it receives from employers and banks (including froms W-2, 1099, and 1098), which the taxpayer could then just review and sign.
- California has already implemented a pilot program of the "Simple Return" plan, which it calls "Ready Return."
This seems to be a valiant effort to make the existing system more manageable for the average taxpayer. But it treats the symptoms rather than the disease. The real problem is the complicated, convoluted, mind-numbing tax law.
Rather than trying to lessen the headache of working within a broken system, let's try to fix the system itself.
Unfortunately, that's where my "wisdom" (or foolishness, depending on who you ask) runs out. I hope to read more about others' ideas for real tax reform over the summer. Stay tuned.