PD Editorial: Opening day approaches ... for tax season

In ancient times, a messenger delivering bad news risked being put to death.

It's a good thing that we aren't living in ancient times, as this tidbit might have gotten us roasted over a slow fire: Wednesday

marks the beginning of income-tax filing season.

If it's any consolation, and it probably isn't, the Internal Revenue Service planned to start processing returns on Jan. 22. But opening day was postponed so IRS computers could be programmed with the latest changes to tax code after Congress passed the "fiscal cliff" bill on New Year's Day.

With taxes, there's usually more bad news to come, and today is no exception.

But before we continue, let's recall Shakespeare's words from "Henry IV, Part Two:" "Gracious madam, I that bring the news did not make the match."

Nay, this match was made by the national taxpayers advocate - the ombudsman for the IRS - in a report that described the herculean task of complying with a mind-numbingly complex tax code.

Individuals and businesses devote about 6.1 billion hours every year to tax compliance, according to Nina E. Olson, the taxpayer advocate.

"To place this number in context," she said in her annual report to Congress, "it would require more than 3 million full-time employees to work 6.1 billion hours, making &‘tax compliance' one of the largest industries in the United States."

By comparison, the federal government has about 1.8 million full-time civilian employees.

Well, why stop when we're on a roll?

Since 2001, Olson said, the federal tax code has been changed more than 5,000 times. To simplify - something that rarely happens with tax law - that's a rate of more than one change every day for the past 11 years.

Is it any wonder that nine in 10 taxpayers hire professional help or buy expensive software to figure out what they owe?

The most recent changes to the tax code were in the "fiscal cliff" bill, and they most prominently include a permanent extension of the Bush-era tax cuts for individuals making less than $400,000 a year (and couples making more than $450,000).

Less publicized were flagrant giveaways to, among others, Hollywood film studios, rum distillers, NASCAR and Goldman-Sachs.

Tax breaks cost the treasury about $1.1 trillion a year, according to Congress' Joint Committee on Taxation. That's almost a dollar-for-dollar match with federal income tax revenue, which is about $1.4 trillion a year.

Closing loopholes is always one of the first suggestions in any discussion of tax reform. The largest tax breaks are for home-mortgage interest and employer-paid health insurance. Repealing them would be unpopular, maybe even unwise. But that should not become an excuse for failing to reconsider all of the deductions, credits and exclusions filling up the tax code.

Unfortunately, tax reform has made little progress in Washington, while lobbying for ever more special breaks is a thriving industry.

As we begin to contemplate filling out our own tax returns, we're reminded of the words of former Treasury Secretary William Simon: "The nation should have a tax system that looks like someone designed it on purpose."