Quote of the Day: Really? Tax reform in the face of such perverse incentives??

All in favor of tax simplification say “aye”. AYE!!! All opposed say “nay”. ………………

I know that all of you, umm, well….., we do have a client/subscriber or three in the tax-planning business (each of whom I respect and admire [sincerely!])….. so let’s say most of you sympathize with my AYE!!

So, given that most Americans would love to see a simplification of the world’s most convoluted mess of a tax regime, the coming push virtually has to yield something substantial in that direction. Right?

Well, even though T.R. Reid, in his thoughtful, instructive, and provocative book A Fine Mess: A Global Quest for a Simpler, Fairer and More Efficient Tax System, points to a 32-year cycle where the U.S. tax code becomes such a “chaotic muddle” that it finally gets revamped into something simpler — which, ironically, predicts a 2018 upending– I’m skeptical.

I suspect that my skepticism results from the fact that 32 years happens to be my tenure in the investment advising business. A period in which my observations, and frustrations, sympathize with the perverse incentives Reid points out in his book:

… tax breaks tend to last forever. Every new preference spurs an army of interest groups and lobbyists who will fight to keep it in the code long after the economic rationale for it has expired. 

“Interest groups” are of course the tax law-writer’s (the politician’s) greatest asset. Hence, my skepticism.

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