Obama Wants A Simple Tax Return

There’s been chatter throughout the campaign that Barack Obama wants to simplify the process of filing a tax return. His chief economic adviser, Austan Goolsbee, has a scheme called the Simple Tax Return which involves the IRS sending an estimated tax bill to anyone with just one employer and claiming one itemized deduction rather than requiring such people to file a tax return. That’s not a huge news break, of course — though the idea that it would save Americans an estimated $2 billion in tax preparation fees is impressive.

But with the recent release of the Obamas’ tax returns, I think I’ve figured out why Obama likes the idea of a simpler tax return. Looking through their 2006 tax return (available here as a PDF), I see 23 pages of neatly typed tax return. I’m sure Hillary Clinton’s, whenever she releases it, will be equally complex.

Even though I know that I wouldn’t qualify for Goolsbee’s simplified approach — freelancers, small business owners and anyone with even slightly complex tax situations will not be eligible — I’m not so sure it’s a good idea to even put it on the table. What if the IRS overestimates your tax bill? I’m sure that the estimators will prefer to go over rather than underestimate. There will be a way to protest, I’m sure, but how many people will actually take advantage of that fact? A lot of people are going to wind up paying more than they owe. And while I’m well aware how much money the federal government needs to function, I think it will cost even more to put the burden of tax estimation on the IRS — requiring more tax dollars to go to that organization.