When I was in law school in the 70s, I took a tax class. I still have the Internal Revenue Code I purchased for the class. It is a small paperback of a few hundred pages – even then basically unreadable. Today the code is thousands of pages – it is at least a few thick volumes. The tax brackets take up two- three pages at most. Once the taxable income is determined, it takes eighth grade math to compute the tax. With fewer brackets, even if it is reduced to one, it would still probably take eighth grade math to compute the tax.
Will fewer brackets reduce the few thousand pages? Of course not. What are the few thousand pages anyway? A portion is directed to how to figure the taxable income. A portion is credits – special incentives offered to corps and others to supposedly motivate them to do stuff that the government essentially pays for. But most of it is taxation of certain industries, certain income, certain different types of entities and special exceptions.
The point of all of this is the blatant assumption by the politicians that we are simply too stupid to realize that turning three or four brackets into two or three will not simplify anything. It will lower the rates on high income earners and I guess we will re-try the Ronald Reagan trickle down economics. I really don’t blame Congress for the complexity of the code. I do think there are tons of special deals for special interests but even those I can’t say are congressional abuse – I just don’t know. What gets my blood pressure up is the “I’ll simplify the code by reducing the brackets.”
Below is the IRC Table of Contents:
SUBTITLE A – Income Taxes (§§ 1 to 1564)
SUBTITLE B – Estate and Gift Taxes (§§ 2001 to 2801)
SUBTITLE C – Employment Taxes (§§ 3101 to 3511)
SUBTITLE D – Miscellaneous Excise Taxes (§§ 4001 to 5000C)
SUBTITLE E – Alcohol, Tobacco, and Certain Other Excise Taxes (§§ 5001 to 5891)
SUBTITLE F – Procedure and Administration (§§ 6001 to 7874)
SUBTITLE G – The Joint Committee on Taxation (§§ 8001 to 8023)
SUBTITLE H – Financing of Presidential Election Campaigns (§§ 9001 to 9042)
SUBTITLE I – Trust Fund Code (§§ 9500 to 9602)
SUBTITLE J – Coal Industry Health Benefits (§§ 9701 to 9722)
SUBTITLE K – Group Health Plan Requirements (§§ 9801 to 9834)
Below are the Chapters for “Subtitle 1.”
CHAPTER 1 – NORMAL TAXES AND SURTAXES (§§ 1 to 1400U–3)
CHAPTER 2 – TAX ON SELF-EMPLOYMENT INCOME (§§ 1401 to 1403)
CHAPTER 2A – UNEARNED INCOME MEDICARE CONTRIBUTION (§ 1411)
CHAPTER 3 – WITHHOLDING OF TAX ON NONRESIDENT ALIENS AND FOREIGN CORPORATIONS (§§ 1441 to 1465)
CHAPTER 4 – TAXES TO ENFORCE REPORTING ON CERTAIN FOREIGN ACCOUNTS (§§ 1471 to 1474)
CHAPTER 5 – REPEALED] (§§ 1491 to 1494)
CHAPTER 6 – CONSOLIDATED RETURNS (§§ 1501 to 1564)
Below are the subchapters for the first chapter.
SUBCHAPTER A – Determination of Tax Liability (§§ 1 to 59B)
SUBCHAPTER B – Computation of Taxable Income (§§ 61 to 291)
SUBCHAPTER C – Corporate Distributions and Adjustments (§§ 301 to 391)
SUBCHAPTER D – Deferred Compensation, Etc. (§§ 401 to 436)
SUBCHAPTER E – Accounting Periods and Methods of Accounting (§§ 441 to 483)
SUBCHAPTER F – Exempt Organizations (§§ 501 to 530)
SUBCHAPTER G – Corporations Used to Avoid Income Tax on Shareholders (§§ 531 to 565)
SUBCHAPTER H – Banking Institutions (§§ 581 to 601)
SUBCHAPTER I – Natural Resources (§§ 611 to 638)
SUBCHAPTER J – Estates, Trusts, Beneficiaries, and Decedents (§§ 641 to 692)
SUBCHAPTER K – Partners and Partnerships (§§ 701 to 777)
SUBCHAPTER L – Insurance Companies (§§ 801 to 848)
SUBCHAPTER M – Regulated Investment Companies and Real Estate Investment Trusts (§§ 851 to 860H)
SUBCHAPTER N – Tax Based on Income From Sources Within or Without the United States (§§ 861 to 1000)
SUBCHAPTER O – Gain or Loss on Disposition of Property (§§ 1001 to 1111)
SUBCHAPTER P – Capital Gains and Losses (§§ 1201 to 1298)
SUBCHAPTER Q – Readjustment of Tax Between Years and Special Limitations (§§ 1301 to 1351)
SUBCHAPTER R – Election To Determine Corporate Tax on Certain International Shipping Activities Using Per Ton Rate (§§ 1352 to 1359)
SUBCHAPTER S – Tax Treatment of S Corporations and Their Shareholders (§§ 1361 to 1379)
SUBCHAPTER T – Cooperatives and Their Patrons (§§ 1381 to 1388)
SUBCHAPTER U – Designation and Treatment of Empowerment Zones, Enterprise Communities, and Rural Development Investment Areas (§§ 1391 to 1397F)
SUBCHAPTER V – Title 11 Cases (§§ 1398 to 1399)
SUBCHAPTER W – District of Columbia Enterprise Zone (§§ 1400 to 1400C)
SUBCHAPTER X – Renewal Communities (§§ 1400E to 1400J)
SUBCHAPTER Y – Short-Term Regional Benefits (§§ 1400L to 1400U–3)