Wednesday, January 19, 2011

WSJ Says Tax Code Too Complex to be Constitutional, Uses private foundation provision as primary evidence

From the tax trivia department:  In a SmartMoney column published yesterday, the Wall Street Journal used a few sentences from the charitable tax exemption provisions (specifically, IRC 509) to demonstrate the absurd complexity of the tax code:

The tax system has clearly gotten too complicated. The code itself holds about 3.8 million words, nearly five times as many as the King James Bible. There's also a much larger body of regulations, which carry the weight of law, written by the Internal Revenue Service, along with court precedents going back at least a century. Add to that the IRS's published opinions on its regulations.  Even if someone could read all of it, the rules would be obsolete by the time he finished. There have been more than 4,400 changes to the tax code over the past decade, or more than one a day.

Can the tax system become too complicated to be constitutional? Consider the following two sentences from different sources:

1. "[A] statute which either forbids or requires the doing of an act in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application, violates the first essential of due process of law."

2. For purposes of paragraph (3), an organization described in paragraph (2) shall be deemed to include an organization described in section 501(c)(4), (5), or (6) which would be described in paragraph (2) if it were an organization described in section 501(c)(3).

The first sentence comes from a 1926 Supreme Court decision that helped establish the right of citizens to known what laws mean. The second comes from the tax code.

Point taken.


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But if the tax code were simpler, how would us tax lawyers make our living!?! Ok, I kid, but many consultants build their businesses around making complex areas of law/business/technology easier to understand, or handling those issues for their clients. I'm sure quite a few tax consultants don't want this to happen.

Posted by: Crossfit Equipment | Jan 19, 2011 7:33:05 PM

meh. It's not complicated, just ugly writing.

Posted by: jpe | Jan 24, 2011 6:54:42 AM

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