ABSTRACT
Complexity abounds in taxation: the length and opacity of the U.S. tax code helps the richest (in the words of Warren Buffett) pay lower actual rates than their secretaries. The U.S. tax code has progressive elements to it, but payroll, Medicare, and sales taxes are regressive, affecting in percentage of income the middle class much more than high wage earners and the wealthiest taxpayers. Complexity also enables an unfair system in which only the rich and large corporations have the resources to find sophisticated ways to pay much less than nominal tax rates. Remember Mitt Romney and his 14% effective tax rate? In health care and energy, complexity costs all of us a lot. In finance and taxes, it helps the “few” enrich themselves at the expense of the “many,” which is even worse. And the few have a lot of political muscle, which they use relentlessly to thwart any type of policies or regulations that would level the playing field towards the many. Any attempt to moderate the behavior of the financial sector and reform a tax system favoring corporations and the wealthy is thus met with fierce opposition and a barrage of self-serving political comments of dubious veracity. Offshore tax havens, receiving much publicity recently with the leaking of the Panama Papers, then the Paradise Papers, continue to help many corporations, billionaires, celebrities, oligarchs, and politicians evade taxes. This game is rigged and needs not only to be simplified but made more meritocratic as well.
