The year 2013 marked the hundred-year anniversary of a defining moment in US history. The Sixteenth Amendment to the Constitution was ratified by a sufficient number of states, making income tax a permanent fixture in the United States. The amendment states:

"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."

Those thirty words led to the Frankenstein monstrosity known as U.S. Code: Title 26—Internal Revenue Code, which contains an estimated four million words and growing daily. In her FY2011 report to Congress, the National Taxpayer Advocate said:

"Last year we noted, for example, that a search of the tax code turned up 3.8 million words and that there had been approximately 4,428 changes to the code over the preceding ten years—an average of more than one a day, including an estimated 579 changes in 2010 alone."

In the case of the tax code, more is not better. More words—more changes—have not improved our tax system. It is disturbingly clear to me—and to most elected officials—that our tax system is completely broken. In nearly every presidential election in the past half century, candidates of both parties have commented on the need to reform—most recently phrased “simplify”—our tax code. Each affirmed that he or she was committed to this effort. Republican and Democrat, conservative and liberal, educated and uninformed—virtually all maintain a constant clarion call for action.

In response to our collective plea, Congress acts—often. Since the passage of the Revenue Act of 1913, our income tax laws have undergone dozens of major modifications, adding or deleting one, then another, tax provision. Many of these amendments euphemistically contained the word reform in their title, with each arguably making our tax code even more unworkable.

Despite the assurances of elected leaders and frequent congressional action, our tax system has become noticeably worse. Humorist Will Rogers is said to have commented, “The only difference between death and taxes is that death doesn’t get worse every time Congress meets.” This proclamation suggests that trusting Congress to repair our tax code requires circular logic. We might be better served to ask Congress to stop.

Out of sheer frustration, I find myself renaming the IRC the “FU” Code. This label is a not-so-subtle hint at what many feel the Internal Revenue system is doing to American taxpayers. And yet, there are many adjectives that begin with the letter "F" that can be appropriately used to describe our failed tax system—frustratingly faulty and fatally flawed. In a word—our tax code is fubar. (note: For those with limited military experience, fubar is a military acronym that dates from World War II. It stands for #%#*@—read F word—Up Beyond All Recognition).

The future of the American economy, weighed down by a finicky, fluctuating tax code, is frightening. Problems will continue to fester under a flaky, feckless, and fluky tax system. Maintaining the status quo is foolish, but trying to fix this snafu is futile. The Internal Revenue Code is a farce and we have to start over—we have to do better. Here’s an idea—how about repeal and replace?

For those unfamiliar with the term Morton’s Fork, it refers to logical reasoning in which outwardly contradictory arguments lead to the same, usually unpleasant, conclusion.

The origin of the term is generally attributed to John Morton, Archbishop of Canterbury. As Lord Chancellor of England, he determined that all citizens, rich and poor alike, could afford to pay exorbitant taxes. The Lord Chancellor instructed his tax collectors as follows:

"If the subject is seen to live frugally, tell him because he is clearly a money saver of great ability, he can afford to give generously to the King. If, however, the subject lives a life of great extravagance, tell him he, too, can afford to give largely, the proof of his opulence being evident in his expenditure."

The dilemma faced by those subjects has been named Morton’s Fork. As the king’s tax collector, the Lord Chancellor’s philosophy reveals a government belief that all citizens, regardless of their economic condition, have an unlimited ability to pay taxes. Just as British subjects were skewered on Morton’s “fork,” middle-class Americans now find themselves impaled on its tines. Americans are taxed if they work hard and save and taxed if they work hard and spend. Anything earned is always minus taxes. For anything purchased with what is left over, the price paid is nearly always plus taxes.

What we have is complex, unfair and burdensome. Former Treasury Secretary Paul O’Neill once said, “Our tax code is so complicated, we’ve made it nearly impossible for even the Internal Revenue Service to understand.” Average taxpayers cannot understand what the code requires or allows, no more than they can comprehend how it truly affects them.

Frequently, when I explain a provision of the tax code, my clients ask "why?". I understand the question. But, after years of struggling to provide a sensible answer to a reasonable question, I finally gave up. I refuse to try to explain the logic of a system that has none. I cannot justify the rationale of a legislative body that has lost all reason. Sadly, I had no answer—no explanation—for them.

My office wall holds a framed cross-stitch given to me by my daughter several years ago. Now, if a client asks “why,” I just point to the tapestry, which reads, 

I can tell you what.
I can’t tell you why.

The problems America faces are as many and diverse as the people who call the United States home. Solutions to these problems are frequently complicated and more often hard to find. If a resolution is identified, it is seldom easy to implement even if agreement is reached on the solution. It seems intuitive, however, that the simplest injury to prevent, the easiest wound to dress, is one that is self-inflicted.

Yet many of the injuries America sustains are self-inflicted by our tax system. I believe that the cause of many of our problems can be traced to the completely dysfunctional IRC. We aren’t just shooting ourselves in the foot with our tax system; we are playing Russian roulette with only one chamber empty!

Once again we are on the precipice of tax reform. President Trump has offered his Uniformed Framework for Fixing Our Broken Tax Code. Promising “More Jobs|Fairer Taxes|Bigger Paychecks”, Trump says his plan offers "Tax Relief and Simplification for Middle Class Families". Let’s hope this is a real chance at meaningful reform. Let’s hope we are not, as Barry McGuire sang, On the Eve of Destruction. 

This post carries an ominous, foreboding tone. Perhaps some levity is required. The word joke carries a variety of definitions, including “something not to be taken seriously”. But, given the unbridled authority bestowed on the IRS to enforce an unenforceable tax code, the issue of tax reform must be taken seriously. Our tax code is no joke.

A second definition suggests that a joke is a story intended to cause laughter. Try as I might, I find nothing in our tax code that can be considered a laughing matter. However, I use humor, not to make light of a serious subject, but to make reading about this tedious topic more enjoyable. To paraphrase a line from the movie My Best Friend’s Wedding, “Maybe there won’t be a happy ending…but, by God, there’ll be laughter”.

Humor aside, bringing about real tax reform is important—scratch that—critical for all Americans. Only by doing so can future generations of Americans have the same opportunity Americans who came before had and enjoy the same freedom my generation and preceding generations enjoyed.


AuthorDoug Spiker