Main Street wants it simple. Congress delivers it complex.

“While Congress delivered the complex and opaque, Main Street yearns for the simple and transparent,” says James S. Henry and Laurence J. Kotlikoff in their July 21, 2010 column in Forbes magazine.  I could not agree more.

Take income taxes, for example. Deliver your income tax information to three accountants and the IRS for preparation or assistance and you’ll get four different amounts of income tax that you owe.  That should be no surprise considering that there are now some 17,000 pages of tax regulations that one must be able to understand.  I don’t have any sympathy for tax cheaters, and I must admit that I said ,”uh huh” when I read in the Washington Post last week that the White staff apparently owes over $800,000 in back taxes for 2009.  But then I began to wonder how much of that amount was due to confusing tax laws and regulations.  Why can’t income taxes be more simple?  Well, the answer is simple: every special interest affected by a change in tax law pounds Congress with reasons that it should not be affected.  The result is complexity in the tax laws.  That really is not surprising given that we use taxes to incentivize and penalize economic behavior in the United States.

Main Street therefore is in limbo right now because it does not know what Congress is going to do about a variety of issues, such as health care, financial reform, business incentives, etc.  One thing Main Street knows from past experience is that whatever Congress does it will not be simple.  So Main Street businesses does not hire, Main Street consumers do not spend and Main Street investors do not invest.  Main Street is on hold.

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