Tax Reform: This is Tax Simplification?

An overview of tax reform and tax simplification starting in 1939, and the years it takes the tax commissioner to actually put the tax regulation changes into effect.

| March/April 1986

On the eve of April 15, we offer a few tax statistics for your contemplation and amusement. 

When this issue of THE MOTHER EARTH NEWS went to press (back in early January), Congress had yet to spit out a new tax bill. So, since we're unable to beguile you with the details of what we'll all have to face eventually, we thought we'd relate a few surprising statistics that contributor and accountant Bob Keim passed on to us recently.

Tax Reform History

The Internal Revenue Service code was originally put to paper in 1939 and remained virtually unchanged for 15 years. And, showing continued restraint, Congress didn't tamper with the IRS code again for another 15 years after the first major rewrite (that of 1954). At that, the Tax Reform Act of 1969 rewrote only 271 code sections and subsections.

Seven years later, however, Congress got busy. The Tax Reform Act of 1976 altered 1,849 code sections — truly an accomplishment, but momentum was only beginning to build. The Revenue Act of 1978 changed another 664 sections, and the 1981 Economic Recovery Tax Act juggled some 483 more . . . while the Tax Equity and Fiscal Responsibility Act of 1982 changed another sections and subsections. After that extended effort, Congress took a year off before dicing up a full 2,245 code sections in 1984! (Too bad the Retirement Equity Act of 1985 can't be seen as a harbinger of things to come; it went after only 44 sections.)

And exactly what effect does all this verbosity have? Well, look at it from the point of view of the people at the IRS. They now estimate that it will take 12 years to issue regulations on all the changes that have been made of late. Now look at it from the point of view of an accountant or a discerning taxpayer. Many of the rewritten sections and subsections leave it to the tax commissioner to make rulings on the changes, and until those regulations are issued (as much as 12 years from now on 1984 legislation), we all live in a sort of limbo. You are (or your accountant is) forced to interpret the law and hope.

One result of the uncertainty in the IRS code is that many more tax cases end up going to court than did before. In the mid-1970s, the Tax Court heard 4,000 to 5,000 cases per year. In 1985, there was a backlog of 70,000 cases for a court system that can hear only 30,000 to 35,000 cases per year. The situation promises only to worsen.

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