Relief from tax law complexity would help US economy

Bob Tippee

The new Treasury secretary's tax embarrassment highlights a lever that he and Congress profitably might pull to repair a broken economy.

Alas, no one is talking about fixing a misshapen and abused tax code.

The $42,702 that Timothy Geithner paid in back income tax and fines didn't keep the former New York Federal Reserve Bank chief from becoming head of the Treasury Department.

Americans, after all, know how difficult it can be to comply with serpentine tax laws and raised scant fuss about Geithner. Most of them over a certain age have made honest tax mistakes, too, and amiably put Geithner's misstep in that benign category.

If someone with his financial acumen can get caught overlooking self-employment taxation for 4 years while employed by the International Monetary Fund, other taxpayers who've received dunning notices from the Internal Revenue Service needn't feel stupid.

On the other hand, many American taxpayers do routinely cheat, trusting statutory complexity to obscure their malfeasance and probably smirking over the Geithner affair.

Use by lawmakers for the political management of human behavior has made the tax code scandalously incomprehensible.

The legislative juggernaut marketed as a stimulus package is just the latest example.

Amid hundreds of billions of dollars' worth of claims against future prosperity now barreling toward an economy in crisis lurk countless tax favors for people who act in accordance with governmental wishes.

Producers, dispensers, and users of alternative and renewable forms of energy, for example, will benefit even more than they already do from these goodies.

Somehow, the subsidized use of noncompetitive energy is supposed to stimulate the economy. "Green jobs," and all that.

In fact, the strategy makes as much sense as further complicating a tax code too confusing even for someone qualified to be Treasury secretary.

A strong step toward economic restoration would be replacement of a corrupt tax system with something simpler and less politically vulnerable, such as a flat tax or consumption tax.

But Geithner will be loath to bestir the tax snake that bit him. And Congress won't surrender its insidious implement of manipulation without a fight.

(Online Jan. 30, 2009; author's e-mail:

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