Newcastle — With the 1099’s rolling in it’s time to face reluctantly the annual battle with the IRS.  I reminisce, with a sort of wry amusement, on how our president, in 2007 while he was still a senator, promised to simplify the tax code “…so most Americans can file their taxes in five minutes.”  He may have kept that promise, but not by simplifying the code.  Some forty-seven percent of us don’t pay any tax at all.  How hard can it be to file that return?  Forty-seven percent is not “most Americans,” but it’s getting there.

In simple fact, the IRS tax code has become more complicated under Obama, just as it has under every preceding administration.  It continues to grow like uncontrolled Kudzu.  Take a look; it’s available online; about 24 megabytes in length, or more than 3.4 million words, seven or so times the length of the bible.

I’d guess it took me about forty hours to file my income taxes last year.  There have been almost as many additional hours consumed in refuting the IRS’ incorrect accusations that I made mistakes.  The net result was that I paid 13.9 percent of my gross income to the feds last year.

Hey! That’s exactly the same as the Mitt Man, though some claim his contribution may be as little as 11 percent according to how we define gross income. (There’s more than one way?)  Of course Mr. Romney made a little more money than I did, and so maybe should be paying a higher percentage than I.  Certainly a lot of people feel that way.  The ranting and foaming to get more from the rich has never been more vigorous.

In Romney’s defense I would point out that his return ran to 203 pages whereas mine was only 20 (not counting worksheets).  Simple analysis suggests that if I spent two work weeks filing my forms, he, with a situation ten times more complicated, must have spent twenty weeks.  I don’t see how he has time to run for president.

How do Mitt and Kit get away with this relatively low rate?  A part is charitable deductions, but mainly it’s because a fair percentage of our income is attributable to capital gains and dividends, which are taxed at 15%.  “Damn that Mr. Bush!” howls the mob.  I don’t agree.  Anybody can take advantage of these breaks.  There’s no law against investing.  Even when I was making seventy-eight bucks a month as a private in the army I was salting away about 10 percent in a stock fund.  It’s not a bad idea to save for your senility.  You should, however, be prepared to lose about half your stake in a sharp recession, as I have a couple of times, the last recently.

Maine treats both capital gains and dividends as ordinary income.  This leads to the result that last year I paid this state almost half of what I paid Sam.  Without bothering to argue about how absurd that is, I would only point out that in spite of soaking the rich, Maine still doesn’t come close to balancing the budget. From this one should deduce that the Bush tax cuts are not the problem causing the federal deficit.  Furthermore, note that in spite of their tax “breaks,” the wealthiest one percent ponies up 40 percent of the tax revenue.  They should contribute more?  I’m much more disturbed that so many pay nothing at all.  It’s simply not democratic.

I’m convinced that the only simple way out of this tax slough is the flat tax where everybody pays, graduated of course.  This will never happen; we have too much invested in the labyrinth of tax law, bureaucrats, accountants, lawyers etc...  So let me suggest just one small piece of the tax code that might be reconsidered.  In keeping with my reputation for contrariness, I will pick something guaranteed to annoy most people.

According to the National Center For Charitable Statistics, there were 1,574,674 nonprofit organizations registered in the U.S. in 2011.  That’s far too many, and these dudes are tax exempt.  Time for some judicious pruning.  I would start with the nonprofit think tanks, a pet peeve of mine, because the title implies intelligence.  OK, maybe that’s a little harsh, but, anyway, it’s another story.  Besides, there are only (?) about 1800 think tanks in the U.S., an insignificant contribution to the plague of nonprofits.

I do not support 501(c) 3 because I am opposed to preferential or discriminatory practices in general, and certainly when the incentive is tax dodging.  Avoidance of tax is the primary motivation for seeking nonprofit status.  Benefits include:  the right to apply for government grants which are restricted to nonprofits (and why?); exemption from federal tax; the inducement of tax deduction for contributors; exemption from state and local income and, in some cases, sales tax; mailing privileges and free radio/TV advertising.  Nice for them but bad for the rest of us who have to make up for the shortfall.

Untaxed assets owned by nonprofits?  Just the public charities reported a worth of $2.56 trillion in 2009: at the same time generating $1.41 trillion in revenue to balance the $1.40 trillion in expenses.  To be fair, not all the revenue is untaxed. There are salaries to be paid, and just because you work for a nonprofit doesn’t mean that you are personally tax exempt.  Even the clergy are taxed like the lay, at least as far as income is concerned.

As for increasingly beleaguered local government, I smack my lips at the thought of taxing the real estate of just the 278,772 congregations in the country.  Let’s get on with it.