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If Steve Jobs Had Run The IRS

This article is more than 10 years old.

Image via CrunchBase

One of Johnny Carson’s jokes that always seemed to get mileage was about his inability to program the clock on his videotape cassette recorder.  Regardless of the time, it always flashed 12:00.

Whether it was Johnny’s anecdote or a broader truth about consumers, one of the hallmarks of design that drove Steve Jobs’ decisions regarding Apple products was simplicity.  Simplicity characterized both the use of Apple products and their appearance.  Jobs recognized that the appearance of something had perhaps as much influence over a person’s psychology about a product as the use itself.

One of Apple’s advertisements showed a stack of manuals about a foot high.  The caption read: What you need to know to use a PC.  Next to that stack was a single, quarter-inch thick manual.  The caption read: What you need to know to use a Mac.

The problem with the Internal Revenue Code is its complexity.  On top of the Code itself are the related Treasury Regulations, Revenue Rulings, Technical Advice Memorandums, Revenue Procedures, etc.  Putting the PC manuals to shame, these occupy roughly twenty or so inches on our firm’s bookshelves.

Taxpayers can call the Internal Revenue Service for general guidance on tax return filing questions.  As a testament to the Tax Code’s complexity, surveys estimate that IRS representatives are wrong in about 50 percent of their answers.  If a taxpayer wants to obtain written guidance on a matter from the Internal Revenue Service – called a Private Letter Ruling – the fee is roughly $5,000 (on top of your professional fees).

With the Code’s complexity comes a sense of unfairness.  (The cost of writing the IRS a letter seems unfair, too!)  The average individual does not have the resources to peel back the layers of complexity.  On top of unfairness is the cost to both the individual and the government to administer that complexity.  If Steve Jobs wrote the Internal Revenue Code, he would have started with simplicity.  Former President Bill Clinton talked about IT when he was in office.  Steve Forbes talked about IT when he ran for the presidency in year 2000.  We have seen a number of members of Congress – of both parties – talk about IT.  IT is a flat tax.  That is, a single percentage with no deductions (except perhaps a lone deduction for charitable contributions).  $X multiplied by Y percent is pretty darn simple.

To satisfy those arguing for “social justice”, there would be a reasonable zero bracket.  President Clinton proposed the first $100,000 of income be not taxed.  One republican senator proposed $75,000.  This can be the one thing Congress can argue about.  But, with such a scheme, the IRS would have 85 percent fewer income tax returns requiring scrutiny.  Think about the cost savings to administer the Tax Code.

To satisfy those arguing for “everyone needs to pay something”, they will be reminded that those making an amount within that zero bracket are still paying Social Security taxes.

While Steve Jobs has left us, we can still benefit from his legacy of simplicity.