Vote Your Pocketbook? Move Tax Filing Day to November
April means one thing to most Americans: tax time.
After weeks of procrastination, those of us who owe money to the federal and state government get busy gathering our W-2s and 1099s, compiling our receipts for business expenses and charitable contributions, and organizing all of it into a comprehensible form. Then most of us - about 90 percent, according to the Internal Revenue Service - ship the information off to a human tax preparer or engage a digital assistant (tax preparation software) to complete our returns.
By the time Americans go to the polls in November, April 15 is a distant memory. We do not connect what we pay for government services with what we get for our money as determined by those we elect to represent us.
There was an effort almost a decade ago to align the costs and benefits of taxation, at least in taxpayers' consciousness. Roscoe Bartlett, a Republican congressman from Maryland, introduced a bill (H.R. 77) in 2007 to change the deadline for filing income tax returns to the first Monday in November, the day before Election Day. Bartlett, who considered himself a "citizen legislator," believed that the price we pay for government, which is taxes, should be a top priority when Americans go to the polls. The time lag between tax day and Election Day severs any relationship between the two.
In other areas of our lives - purchasing goods and services for a home or business, for example - we engage in cost-benefit analysis. Is it worth paying extra for a name brand, or should I go with a cheaper generic? Does the product come with a warranty? What is the feedback on a particular service provider? Will I ever hear from my building contractor again if the work he did doesn't survive the winter?
When it comes to the cost of government, we are less discerning. We are willing to pay up front for some yet-to-be-determined benefits.
Tax filing day isn't set in stone. Congress has the power to change it. With the ratification of the 16th Amendment and introduction of the income tax in 1913, Congress set March 1 as tax filing day. In 1918, the date was moved to March 15, only to be changed again in 1955 to April 15.
Changing the date would come with significant costs, according to a 2007 policy brief from the National Taxpayers' Union. The IRS would have to notify taxpayers of the date change, offer customer support and answer questions, and update IRS computers (think Y2K). And that's just on the federal level. Throw in costs to the states, and the NTU estimated the total cost at $3 billion. (The government would have to secure additional tax revenue from some source with delayed filing.)
That sounds like a lot of money to change a lousy date. But there's an offset. If Bartlett is correct and the synchronization of tax and Election Day encourages voters to demand tax reform and simplification, the upfront cost will swamped by the time and money saved on tax compliance.
In its annual analysis of tax complexity in April 2015, the NTU estimated that households and businesses devoted a combined 6.1 billion hours at a cost of $234 billion to comply with the federal tax code in the prior year. The instruction booklet for the 1040 form has jumped from 2 pages in 1935 to 52 pages in 1985 to 209 pages today for Form 1040 and related schedules. The Affordable Care Act has added additional layers of complexity.
The U.S. tax system does an excellent job of disassociating what we pay from what we get. Payroll taxes for Social Security and Medicare, federal income taxes withheld from paychecks, and quarterly estimated payments anesthetize us to the total tax burden. The majority of taxpayers - more than 70 percent this year, according to IRS estimates - get a refund. They file early and seem to view the repayment of a no-interest loan to Uncle Sam as some kind of winning lottery ticket.
Withheld income tax, introduced in 1943 as a temporary war-time measure, is often considered a hidden tax because it distracts us from the true tax burden, said NTU president Pete Sepp in a phone interview. What's more, the taxpayer is deprived of any interest he could have earned on that money during the course of a year.
Sepp was reminded of something David Brinkley wrote on hidden taxes in his 1996 book, Washington Goes to War. Congress and the president, Brinkley noted, learned what automobiles dealers had figured out a long time ago: that monthly installments deflect the actual cost of a car.
The government may be slow to catch on, but it knows a good thing when it sees it.
As for taxpayers, once April 15 has come and gone - tax filing day falls on April 18 this year because of a Friday holiday - we are so relieved to be done with the process that we put the entire experience out of mind.
Taxes are how we pay for government. Legislators decide how to allocate the revenue. Elections are the means through which we influence those making the decisions.
Moving tax day closer to Election Day would be a perfect application of Senate Majority Leader Mitch McConnell's new maxim, "let the American people decide." And it gives a whole new meaning to the phrase, "vote your pocketbook."
Caroline Baum is a contributor to e21. You can follow her on Twitter here.
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