True North

An amazing thing about the liberal mind-set is its capacity to compartmentalize – to isolate issues as if they existed in a vacuum. Case in point is the meme circulating among the supporters of Al Franken that his lapses in paying his obligations to government are not a character flaw; Franken is the victim of a complex tax code. Consider this prime example – Charley Quimby’s defense of Al Franken’s failure to file proper business and tax forms associated with Franken’s various business enterprises.

Quimby, a Communications Fellow at Growth & Justice, a progressive Minnesota think tank that focuses on economic and social justice, writes:

While many people get the difference between a comedian and a bigot, fewer understand running a small but complex business. Thus, Franken's failures to make proper business filings in New York and California can more credibly be blown up (falsely by his critics) into gargantuan character flaws and ethical lapses.

I'd wager at least half the U.S. Senate could not walk you through their tax returns, and if I found one senator's return without a signature from a professional tax preparer, I'd be shocked. …

Except for those stalwarts who do it for a living, filing tax forms and keeping up with regulations is minutia — especially in a business like Franken's that involved many different income streams from multiple states. Speaking fees, publishing and broadcast royalties, paychecks for TV appearances and associated expenses must only be part of his accounting. Then there's keeping up with tax and business law wherever he may land and pick up a payment.

Trust me, anyone in his situation will rely on others to stay on top of this stuff.

For example, I sold my company in 2005 but still own a very small stake in it. Among the 70 or so pages of tax forms I file each April, eight pages go the state of Georgia, where the company has an office. This year, I sent a check to Georgia for $6, the amount due on the taxable business income from Georgia attributed to me for 2007, which is still sitting on the company books, not in my pocket.

Meeting this obligation no doubt cost me more than I paid in tax. Was I aware I owed this tax? Only because my accountants told me so. Did I pay the correct amount? I have no idea and even less interest in reworking my accountant's computations, which were based on reports from my former company's accounting firm. If a problem turns up, I'll address it.

So Charlie, what’s wrong with your picture? Hint: It is little to do with Franken’s character or your cavalier attitude toward your personal tax obligations.

If Franken is a victim of tax system complexities, then the victimizer is a government tax system that is so complex, only “those stalwarts who do it for a living, filing tax forms and keeping up with regulations is minutia” can keep up with it. And Franken is not the only victim. What about the rest of us poor schmucks trying to earn a living and better ourselves?

Not all of us are as fortunate as Franken and Quimby that we can ignore the minutia and wait for tax problems to come up and then deal with them – go through an audit, dig up our records, and pay fines plus interest for the sake of convenience. Not all of us have the luxury of having people. Not all of us can afford to spend more to meet an obligation than we owe in tax. And by the way, God bless H & R Block, but every dime American taxpayers pay H & Block is an unproductive expense that sucks money from the economy and creates no new wealth. Individuals can save money by saving on taxes; society loses in aggregate when individuals must “waste” money in order to calculate exactly how much tax is owed.

Taxes are necessary; a complex tax system is not. Coincidently, the major cause of the complexity of the tax system is the type of reforms folks like Quimby and Franken promote. They want to make the system “fair and equitable,” which is a moral position, not an economic one. What makes a tax system “fair” is that it is uniform, easy to understand, and not subject to change at the whim of government. The system we have today piles exception on exception in a vain attempt to make sure everyone "pays their fair shares." It is difficult to understand, and the tax system is used to reward and punish individuals and industries that please or tick off the powers that be. The result is a tax system that drains the economy not just through its sheer size, but through its complexity and inefficiency.

If Quimby wants to use the “it’s soooooo hard to pay taxes” defense for Franken, then perhaps, given he works in a think tank and not a whine vat, he might want to give some thought to simplifying the tax code along economic lines not making it even more complex with arbitrary “fairness” features that are anything but fair.

If Franken is the victim of a complex tax system, then so are the rest of us. Franken is foisted on his own petard – he’s victim of a system his people created. He’s got the means and the people to deal with it. The rest of us don’t, and people like Quimby either don’t care or haven’t given us a second thought. Were I of Franken’s and Qumiby’s ilk, I’d probably whine, “It’s not fair.”

Cross-posted at the Minnesota Free Market Institute (www.mnfmi.org)