The More Things Change - the More They Change

Tom Daschle withdrew his nomination for Secretary of HHS this afternoon. I am surprised. Gerald Seib the Ace reporter for the WSJ said this morning that he thought that might happen. He said this is a new era and the appearance of impropriety here comes not from the not paying taxes but from the separation that the acceptance of the limo and driver seemed to create. I am quite frankly surprised by the outcome. In earlier eras that might not have been a disqualifying circumstance.

In recent years the separation of our elected officials from their constituents has proceeded almost unabated. This may be the beginnings of a reintroduction of Washington to the rest of the US. It might be a refreshing trend. Regardless, I stand by the explanation of this problem and hope that someone will notice the need to simplify our tax system. The disconnect between tax payers and Washington (which generally wanted to excuse Daschle's lapse) can be seen in the attached chart which is a summary from the IRS taxpayer attitude survey.

Taxvox (Howard Gleckman) presents a paper by Joel Slemrod that estimates tax compliance costs in the US at $125 million or about 13¢ per dollar collected. He also estimates that compliance is a non-issue for about 40 million taxpayers and the compliance is not necessarily related to income (more compliance with more income). Finally, he says that the costs of compliance are concentrated in record-keeping and that programs like TaxCut do not help with that function. A code which has all those characteristics is bound to fail - regardless of how honorable the taxpayers are.