Many of my readers likely do not know what Tinkertoys (Tinkertoy® – a registered trademark of Hasbro; licensed, developed and distributed by K’NEX Brands, LLC) even are. In an era dominated by electronic games, including video construction games like SimCity, toys like this are sadly becoming only a fond memory.
The Tinkertoy Construction Set is a toy modeling set. Created in 1914, the set was based on the Pythagorean right triangle and it was intended to encourage children to use their imaginations. The cornerstone of the set is a wooden spool with holes drilled every 45 degrees around the perimeter and one through the center. Using just this spool, or a number of spools, together with different length sticks, Tinkertoys have been used to create surprisingly complex machines.
You may now be asking why the dissertation on a plaything?
The answer is simple. We have a new and different tinker toy. Created in 1913, the year before the more commonly known model, this tinker toy has become the favorite plaything of the men and women we elect to Congress. This tinker toy is none other than the Internal Revenue Code. There is now no more enjoyable pastime for members of Congress than to sit down to a game of Code tinkering.
Forget all of the various names given to our tax code. Originally, those names were simple: Revenue Act of this or that year. Lately, those names have taken on more socially directed names like The American Recovery and Investment Act of 2009. All along, however, they should just be called the Congressional Tinker Toy Act of (fill in the year).
To be completely transparent, I should disclose that Congress’ tinker toy is, in one significant way, remarkably similar to the timeless invention that has been enjoyed by millions of young girls and boys. The similarity is that Tinkertoys, whether licensed by Hasbro or developed by Congress, can be and have been used to produce surprisingly complex mechanisms. Smiles beam from faces as representatives create unbelievably complex laws, policies, calculations and methods.
In many of my previous posts, I have alluded to the complexity that has taken firm hold of our tax code. I will devote an entire post to this subject at a later time. Nonetheless, for over a decade, the Office of the Taxpayer Advocate has frequently and consistently reported to Congress that complexity, with its resulting errors, distrust and non-compliance is the single greatest problem faced by our country with regard to our tax system.
And Congress’ consistent reply? More tinkering. More complexity.
With the recent election now reduced to political punditry, an oft voiced subject is that of tax reform. It seems to be a consensus view that Americans will finally get some relief through major tax reform. My suggestion. Don’t hold your breath!
The recent furor over corporate inversions and the effort taken to shield corporate profits from the taxman by leaving those profits overseas has generated a strong tailwind for a tax reform effort.
Republicans condemn the excessively high corporate tax rate, the highest statutory rate among developed countries. Democrats respond that this argument is nonsense, that no company pays the statutory rate due to all of the various deductions, credits, offsets and offshoots embedded in the tax code. Democrats criticize the unpatriotic behavior, some might call it rational behavior, demonstrated by companies moving their corporate address to Bermuda or some other business tax friendly country. Both parties rail against this or that tax preference bestowed by the tax code on one or another industry.
Despite all of this in-fighting, it is very likely that we will get changes to our corporate income tax laws. But reform? Real reform? Comprehensive reform? Not likely. Many predict a lowering of the top corporate tax rate to something between 25% and 28%. Others predict changes to provisions that subject American corporations to tax on worldwide income. It is also likely that some tinkering will occur with the ability of corporations to play hide-and-seek with corporate headquarters.
Raising or lowering rates has nothing to do with the overall problem Americans face under the Internal Revenue Code. Those problems manifest themselves in a number of ways which in many situations are unintended. Often, one section of the code works at cross purposes with the specific intent of another. One universally recognized impact of all of this nonsense is the diversion of resources. American taxpayers, whether individual or corporate, make financial decisions not based on the potential economic benefit, but on the tax consequences.
Lost in all of the discussion on corporate tax reform is the entire scope of problems embedded within the individual income tax sections of the code. Don’t even get me started on payroll taxes.
But Congress continues to play with this toy they have created. The end result of all of this tinkering will be more complexity; more political maneuvering to gain electoral high ground; more financial scheming to reduce tax liability.
To continue to merely tinker and respond sporadically to the more obvious inadequacies of the existing tax system is irresponsible. Partial and stopgap remedies will not address the fundamental problems of a failed tax system and will make complexity and compliance difficulties even worse. Congress must stop playing on our hopes and fears! It must stop tinkering with tax rates! It must stop toying with tedious tax code text! It must stop gaming tax giveaways!
It has been suggested that insanity is best demonstrated by taking the same approach and expecting different results. Placing yet more band aids on the SNAFU legislation known as the Internal Revenue Code has not worked previously and will not work now. Continued attempts to do so burden our combined resources and try our collective patience. I believe that the IRC must be completely overhauled. I suggest a bonfire.
Bonfire aside, I am not alone in taking this position. This assessment is so commonly accepted that expressing it here is stating the obvious. Almost everyone, regardless of political persuasion, agrees that our tax code needs to be fundamentally changed. Now is the time to actually do something.
We tend to reduce all political equations to a zero sum game – someone must lose in order for someone else to win. It is likely I have not made the point well enough but our tax code is simply wrong – wrong in principal, wrong in practice. The practical reality is that the code creates winners and losers. It does so each day without any rhyme or reason.
Yes, should we undertake this effort and produce meaningful reform, some among us will pay a higher tax bill, perhaps in the long run as well as the short term. Others may pay less. I am not advocating for higher or lower taxes, just a tax system that makes sense. But if we achieve real reform, I believe that our country wins. We reduce the collective burden of compliance and enhance social equity and freedom. If that is true then it necessarily follows that we all win.
Here is a suggestion for Congress. Rather than playing with a tinker toy, or just tinkering with the code, why not let imagination take hold? Why not get yourself a transformer? You know! That is a toy you could really use. Turn this Frankenstein you have created into a super hero.
Playing games took on a whole new perspective in the 1983 movie WarGames. The movie’s story centers a rebellious teen who wants to hack into a game company mainframe. By mistake, he hacks into a defense war game computer and initiates a run up to a nuclear war.
There are a number of moral messages offered at the close of the movie. One of these was an analogy offered by Stephen Falken, the brilliant scientist who created the war game exercises. He originally created the gaming model so that leaders could learn without really fighting a war. But, as the computer closed in on the launch of nuclear missiles, he told the two teen protagonists that they should just accept their fate. He described nature’s way of dealing with catastrophe.
“Once upon a time, there lived a magnificent race of animals that dominated the world through age after age…until suddenly, quite recently, they disappeared. Nature just gave up and started again. We weren't even apes then…And when we go, nature will start over… Nature knows when to give up…”
Congress should just give up trying to fix what can't be fixed and start over.
The movie ends with our hero trying to get the computer to do what it was designed to allow humans to do: learn. The following conversation occurs after the computer has played out all possible outcomes for Global Thermonuclear War.
- Joshua (the computer): Greetings, Professor Falken.
- Stephen Falken: Hello, Joshua.
- Joshua: A strange game. The only winning move is not to play.
Memo to Congress – Only winning move is to not tinker. Give up and start over.
Have to go now. It's playtime. Just like Joshua, I think I will ask my grandson, Ryan, "how about a nice game of chess?"