Tax Day is coming. Are you excited?
According to the latest data out of the Organisation for Economic Co-operation and Development, Americans as a people pay one of the lowest tax burdens in the developed world. Out of 34 countries with democratic governments and market economies, the U.S. ranked third lowest for overall tax burden as a percentage of GDP in 2012, and probably fourth lowest in 2013 (for which data is not yet complete).
And ... we're mad as hell about it, and we're not going to take it anymore. Wait, what?!
Survey Says ..
That's right. America may rank in the lowest decile of countries for tax burden, but that doesn't mean we're happy about it. In fact, according to a new poll out of Pew Research, 59 percent of American taxpayers believe that "there is so much wrong with the federal tax system that Congress should completely change it." At the same time, though, we can't quite agree on just what needs to be changed.
And 72 percent -- and they'll tell you they're a little bit, or even "a lot," bothered by the complexity of America's tax system. At last count, the U.S. Tax Code was just under 74,000 pages long, and growing rapidly -- up 10 percent in length since President Obama took office. If you tried to read the whole thing, averaging, say, five minutes per page, and spent eight hours a day, seven days a week, it would take you more than two years to finish.
By which time, Congress will have changed it. Twice.
With such a big document, it's impossible for any single taxpayer to know everything that's in the Tax Code. And so, many of us worry that even if we're paying our fair share, someone else probably isn't. But who is that "someone else," exactly?
Twenty percent of respondents polled by Pew worry "a lot" that "poor people" don't pay their fare share. Sixty-one percent of us have the exact same concern about "wealthy people." And corporations? We trust them least of all. Sixty-four percent of individuals polled are convinced that corporations-that-are-people aren't pulling their weight.
The More You Earn, the Unhappier You Are
Simplifying the tax code might help to alleviate such concerns, and the greatest impetus for change here seems to lie in Form 1040. As in, not the 1040EZ form that the IRS says "is the simplest form to fill out."
You see, the more likely you are to earn so little that you qualify for 1040EZ filing, the less likely you are to think taxes are too complex. Earning more than $100,000 -- or earning any income at all from stock and mutual fund dividends, which most well-off taxpayers do earn -- is enough to disqualify a taxpayer from filing an "EZ" form, limiting its usage to lower earners. And tellingly, among very low earners, Pew's responses show that only 33 percent of taxpayers earning under $30,000 (for example) are bothered "a lot" by the system's complexity.
That number spikes to 47 percent as incomes rise past $30,000 and approach $100,000. And above $100,000, there's a clear majority in favor of simplifying tax forms, with 55 percent saying they're bothered "a lot" by the tax code's complexity. These folks -- the $100,000-plus earners -- are also twice as likely as folks earning less than $30,000 to argue they pay more than their fair share in taxes -- 54 percent versus 27 percent.
After April 15, 2015 Comes Nov. 8, 2016
One final note, this being the week in which candidates began coming out of the woodwork to declare their interest in running for the 2016 presidency. According to Pew, 66 percent of Republicans responding to the survey now support changing the tax code "completely." That number jumps to 72 percent for self-described "conservative" Republicans.
Tax-wise, Democrats are more laissez-faire, with only 48 percent advocating wholesale change to the tax code. (But curiously, the more liberal the Democrat, the more they want to change the tax code.) Meanwhile, Independents -- the nation's swing voters -- lean toward the Republican position, with 63 percent backing wholesale tax reform.
All of which suggests that tax reform could become an important part of the national debate as Election 2016 kicks into gear -- both in the Republican primaries, and then in the general election as well.
Motley Fool contributor Rich Smith is proud ... no ... more like relieved to say that his taxes are done and posted. (Honest, IRS. The check's in the mail.) Try any of our Foolish newsletter services free for 30 days. Check out our free report on one great stock to buy for 2015 and beyond.
Tax Day is coming. Are you excited?