People have been demanding a simpler tax system for a long time. We’ve had various presidential candidates promise that the IRS could do your taxes or the code could be simplified down to a postcard or whatever. But what people say they want and what they actually want are sometimes two different things. People want a simpler tax code … except for the mortgage interest deduction. And the charity deduction. And state/local taxes, definitely. And daycare, obviously. And healthcare expenses. And retirement contributions. And is it really fair to tax capital gains like income?
Therein lies the rub: the tax code didn’t get complex because of a ancient Egyptian curse. It got that way because we wanted it that way. We want our special deductions and social-engineering credits and alternative systems and all the other jazz. We will never simplify the tax code until a majority of Americans decide that it’s worth giving up their favorite deduction for. Or worth giving up a refund for. And this outcry is a reminder that we’re not there yet, if we ever will be. I suspect, after a year or two, most people will get used to the new system and this hubbub will die down. But this portends a tax system that will mostly go on as the shambling drunken mess that it is.
Of course, in the long run, nobody’s taxes have been cut. As Harry Browne argued in the 2000 election, a tax cut without a spending cut is not really a tax cut; it’s a shell game. Eventually, things have to be paid for. The deficit is surging right now and we are on a completely unsustainable fiscal path. Trump’s tax cut has not reduced the tax burden, Laffer Curve misrepresentations not withstanding; it’s re-arranged it so that the burden falls on the future rather than the present.
So if you’re upset that your refund is smaller or non-existent this year, better hold on to something. Because it’s only going to get worse.