The Imitation Game is the critically acclaimed story of Alan Turing, a British mathematician who is widely credited as being the father of computer science and artificial intelligence. Benedict Cumberbatch plays Turing, whose work in cracking Nazi Germany's "ENIGMA" code helped lift the Allies to victory in World War II.
Seventy years later, retiring Senator Tom Coburn (R-OK) has picked up the code-breaking bug. But Coburn has decided to take on something even more twisted and fiendish than Nazi ciphers. That's right — he's just issued a 312-page "Tax Decoder" taking on our tax system. (Read it at your peril — if decoding takes 312 pages, just imagine what the encrypted version looks like!)
Coburn's goal is to give us "an educational reference guide designed to equip taxpayers and lawmakers with the details needed to thoughtfully reconsider many aspects of the existing tax code." We're not sure why Coburn thought he needed 312 pages to make his case — anyone who's ever seen their first paycheck and wondered "what's FICA?" knows the system is a mess. Still, here are some highlights:
- Our tax system has metastasized like a glioblastoma. "In 2012, the Internal Revenue Code contained over 4 million words, enough to fill 9,000 pages. By way of comparison, a pamphlet with the original 1913 income tax required only 27 pages for the full text of the statute."
- Our friends at the IRS really do want to help, but they're just underfinanced, understaffed, and underfed. "From FY 2004 to FY 2012, the number of calls the IRS received from taxpayers on its Accounts Management phone lines increased from 71 million to 108 million, yet the number of calls answered by telephone assistors declined from 36 million to 31 million."
- The law is full of inappropriate and wasteful giveaways benefiting taxpayers who would do just fine without them. "There is no shortage of tax subsidies for the rich and famous, such as credits to renovate vacation homes and purchase luxury cars and deductions for yachts. McDonald's even received tax breaks to sell Chicken McNuggets overseas."
- Too many "not-for-profit" groups serve their own interests instead of the public interest. "Lady Gaga's 501(c)(3) Born This Way Foundation is advertised as an organization that connects youth with antibullying, mental health, and other community resources, but its main activity appears to be throwing free pre-concert tailgate parties for fans."
Coburn's solution probably won't surprise you. Ideally, throw it all out and start over. At the very least, make it simpler, flatter, and fairer. "The tax code should be simple enough that everyone — including members of Congress — is capable of filling out their own tax return." (We'll let you decide if that means an easier tax system or smarter members of Congress!)
Still, there is some good news that we can help you put to work — and you'll find it on the very first page. "Due to the code's complexity, your taxes are not a simple calculation of earnings and obligations. Instead, taxes are determined by how well you can take advantage of the hundreds of tax credits, deductions, exclusions, and carve-outs tucked into the code." In other words, all that complexity creates opportunity — and the more complicated your taxes are, the more likely we can help. So, if you're looking for a New Year's resolution to kick off 2015, call us and resolve not to waste any more money on taxes you don't have to pay!
Let's Talk! For a deeper conversation on our services, or to become a client, call Kenneth Hoffman at (954) 591-8290 Monday - Friday for a no cost consultation, or drop me a note.
Kenneth Hoffman of K.R. Hoffman & Co., LLC is a highly sought after tax and business counselor. As a trusted senior advisor and counselor working closely with Entrepreneurs, Professionals and Select Individuals, Mr. Hoffman provides counsel to his clients who are navigating through the complexity of today's business, tax, and accounting challenges.
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