Tax simplification by the numbers

The federal income tax code is an abomination. It's so complex that it encourages cheating, causes accidental overpayments, is difficult to administer and costs taxpayers billion of dollars just to comply with its demands, according to the National Taxpayer Advocate's annual report to Congress.

Taxpayers feel justified in "fudging" because "no one wants to feel like a tax chump - paying more while suspecting that others are taking advantage of loopholes to pay less," the advocate, Nina E. Olson, concluded. That has to change.

In theory, almost everyone wants a simpler code with lower rates and fewer special breaks. Recent deficit reduction commissions have said that could even help the government contain its red ink. What's not to like? Well, to achieve all that, taxpayers would have to let go of some of the $1.1 trillion a year in deductions, credits and exemptions in the current code.

Giving up existing breaks is a tough sell, and not just for notorious special interests. "The dirty little secret is that the largest special interests are us," the advocate reported. Among the biggest ticket deductions are those for mortgage interest, retirement savings and employer contributions for health insurance.

So, of all the big jobs Washington faces, rewriting the federal tax code may be the toughest. Nothing will engage, scare and infuriate the average Joe and Josephine, corporations, lobbyists and lawmakers quite like Congress deciding who should pay what to the government. It will make for a treacherous minefield, but one that Congress should traverse.

Taxes are all about the numbers, so here's the numerical case for tax simplification:

$163 billion. That's what it cost taxpayers to comply with tax filing requirements in 2008, an amount equal to 11 percent of total federal tax receipts.

6.1 billion. The number of hours we spend each year doing our taxes.

$290 billion. The annual gap between taxes owed and taxes paid, according to the IRS's most recent estimate.

3.8 million. The number of words in the federal tax code.

4,428. That's how many changes have been made to the tax code in 10 years - more than one a day.

1 foot. The height of a stack of the regulations issued by the Treasury Department to provide guidance on the tax code.

100,000. The approximate number of IRS employees.

167 million. That's how many calls the IRS received in 2008. It was able to answer only 53 percent of them.

When the income tax was first enacted in 1862, the goal was simple: to raise revenue. Since it became a fixture in 1913, it has morphed from straightforward revenue raiser to a tool for behavior modification, with incentives for such things as buying a home, having a child or even producing a television program.

The IRS's own taxpayer advocate's voice is now part of the chorus calling for a return to a simpler time. hN