- Days left
If there's one thing all Americans can agree on, it's that our income tax system is terrible. Navigating through the rules is a nightmare, and no matter how little or how much people pay in income taxes, they almost always end up feeling cheated.

Here are my top five reasons why I hate our income tax system:

1. Too complex – Even the professionals don't understand the entire code. There are volumes of books dedicated to translating the rules and helping tax preparers learn how to apply them. The number of different rules is astonishing, and it's no wonder that many mistakes are made on tax returns. Why have a system that the average taxpayer can't understand? Why make it so difficult that most people can't even prepare their own taxes anymore?

2. Loopholes to benefit special interests – It's no secret that all the special deductions and credits have their roots in the special interests of one group or another. Why is there a tax credit for one industry, but not another? Because the one with the tax credit probably lobbied more and threw more money at lawmakers. It's not right. It violates a basic sense of fairness and guarantees that the free markets aren't working on their own. We want the free market to decide what industries and activities are the most efficient and worthwhile. We don't need the government intervening to give a special advantage to one industry, at the expense of others. That's exactly what parts of our current tax code do.

3. Punishes productivity – If you make more, you're taxed at a higher rate. Sure, the theory is that if you're better off, you can "afford" to pay a larger share of taxes. But is that really necessary or even fair? Why should a high income individual have to pay 36% in federal income taxes on the top level of income they've generated? Do they not deserve to keep just as much of their earnings as the lower income person? Not under our tax system, they don't. The IRS admits that the top 5% of all taxpayers pay over half of all income taxes, even though they account for only one-third of the income.

4. Inherently unfair – The larger your family, the lower your income taxes. That sounds very unfair to me. Suppose you have a single man with no children who makes $60,000 and uses the standard deduction. He'll owe $9,243 in federal income taxes. Compare that to a man with a wife and four small children earning $60,000. He will pay no federal income taxes. (That's right. Zero.)

I understand that it's harder to support a family of six on $60,000 than a family of one. Yet the single man with no children had to work equally as hard to earn his $60,000 as the family man did, but the single man has a big tax bill to go along with it. Clearly, the family of six utilizes proportionately more government services than the single man does, yet they pay no income taxes. Is that fair? Of course not.

5. Tries to regulate behavior – Tax deductions and credits are offered for things that are deemed "good," such as charitable contributions or the costs of owning a home. But is it really the place of our government to try to encourage or discourage certain behaviors with monetary incentives and penalties? I'd argue that it's not.

Our tax system is so broken, that it can't be fixed. Our best alternative is to wipe out what we have and start over. We need to find a solution that gives everyone a stake in our government. That means everyone should pay, even if it's only a token amount.

The goal of a new tax system should be fairness across the board. Don't punish people who don't have families or who have found a way to make a lot of money. Don't try to punish or reward certain behaviors. Just have us all pay a small part of the tax bill so that no group of people is unfairly burdened by a bad and complicated system.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

Increase your money and finance knowledge from home

Introduction to Preferred Shares

Learn the difference between preferred and common shares.

View Course »

What is Inflation?

Why do prices go up?

View Course »

TurboTax Articles

Will Medicare/Medicaid be Impacted by ACA?

The Affordable Care Act put in place significant tax-related programs that impact Medicare and Medicaid, such as increased Medicare taxes on earned and unearned income for high-wage earners, and Medicaid changes that increase the number of insured individuals. Establishing whether you are affected by the ACA-imposed taxes, or are eligible for certain health programs that fall under the Centers for Medicare and Medicaid Services, is determined by filing your income tax.

8 Things You Think Are Tax Deductible That Aren't

There?s a fine line between looking to save money on your taxes and taking deductions that will raise eyebrows at the Internal Revenue Service. Some taxpayers are tripped up by expenses that they assume are tax deductions, but don?t qualify under IRS guidelines. Here are a dozen items that can lead to unpleasant surprises in case of an audit.

Essential Tax Forms for the Affordable Care Act

The Affordable Care Act (ACA), also referred to as Obamacare, affects how millions of Americans will prepare their taxes in the new year. The law now includes penalties for all who haven?t obtained health insurance -- and those penalties are expected to be paid at tax time. The ACA also provides tax credits to help people pay for insurance, and you can claim those credits when you file your taxes. The Internal Revenue Service (IRS) has introduced a number of tax forms to accommodate the ACA.

How to Determine if You Have Minimum Essential Coverage (MEC)

The Affordable Care Act, also known as Obamacare, requires most Americans to have health insurance that meets a government standard known as "minimum essential coverage," or MEC. Whether your insurance qualifies as MEC depends not on the plan itself, but on how you obtained your coverage.

What are 1095 Tax Forms for Health Care?

In 2014 the Affordable Health Care Act, also known as Obamacare, introduced three new tax forms relevant to individuals, employers and health insurance providers. They are forms 1095-A, 1095-B and 1095-C. These forms help determine if you need to comply with the new shared responsibility payment, the fee you might have to pay if you don't have health insurance. For individuals who bought insurance through the health care marketplace, this information will help to determine whether you are able to receive an additional premium tax credit or have to pay some back.

Add a Comment

*0 / 3000 Character Maximum