Conor Friedersdorf has a must-read piece on the complexities of the tax code and the anxieties that it causes.
Imagine, for example, that a new job forced me to commute from my house in Washington DC to an office in Northern Virginia. One night, my boss mentions that his driver lives nearby my house. “I’d be happy to have my car drive you here in the morning,” he says. “It’s no difference to me, and you could save some money on the metro.”
Prior to this week, I’d have said, “That’s awesome — thanks so much.” But apparently the right answer is, “No thanks, I’d love the ride, but owing hundreds of thousands of dollars of taxes on your gift would ruin my life!”
Or are my circumstances different in a way that would enable me to accept the rides without owing so much? I cannot figure it out. I’ve spent an hour on Google, scoured the IRS Web site, and G-chatted my most financially savvy friends. Still no conclusion, or even an educated guess, and surely I am better positioned to investigate the matter than most Americans. Obviously I could call an accountant, who could explain things to me, but given this example I’d never have thought to ask.
Nor can I easily determine, for example, whether I ought to pay some sort of tax if I hire someone to help me move boxes for a couple days, or pay a friend to design a Web site for me, or whatever. I’ve made a good faith effort to pay what I owe in taxes over my working life, but I haven’t any confidence that my returns have been perfect, and I couldn’t tell you whether I’m richer or poorer for any mistake.
Given that Tom Daschle helped write and pass the tax laws in question, I don’t feel sorry for him. But what about the rest of us?
It’s not at all obvious when, for example, someone crosses the line from “independent contractor” to “employee.” And, really, it makes no sense for individuals — as opposed to businesses — to ever have to pay taxes for contracting out services.
For those above a certain income threshold, there’s not much choice but to hire an accountant, which is itself a shame: Why should citizens have to spend a lot of money in order to ensure that they’ve paying the right amount of money to their government? But even hiring an accountant isn’t foolproof; most simply have you give them your records and they then file for you — most don’t grill you on every possible contingency.
Photo by Flickr user Cayusa under Creative Commons license.