Hey Tax Filers: There’s (At Least) One Thing You Should Know…

Tax Day is less than two weeks away. You might be like my spouse and me: Still working on your return and resigned to paying a balance due. Or maybe you’re relieved that you already have received your refund.  

That’s tax season for filers in a nutshell. You give, or you get. There’s far more to it than that, of course. Tax policy is the “reason for the season,” determining not only who gives and gets but how and why. 

But few understand tax law. Only about a third of Americans say they know a fair amount or more about US tax policy, and what we know is limited and at times contradictory

To help clarify matters, I asked ten TPC experts for a postcard-sized answer to this library-sized question: “What is the single most important thing an average filer should know about tax policy, and why?”

Their answers were different but had much in common. And they all lead to that single most important thing. Here they are, in slightly edited form:

You are not alone, and you are unique.

“Everyone pays taxes. Even if someone does not owe federal income taxes, they’ve often paid federal payroll and excise taxes and state and local taxes.” — Kim Rueben

“There is no average…. Whenever an average filer hears about how a tax bill will affect ‘them,’ or if this or that state is ‘high tax’ she needs to think about her income, work, family, and life situation,” because with tax policy and how it affects you, “it depends!” —Richard Auxier

The taxes paid by you and others help you and others.

“The three biggest things your tax dollars are used for are Social Security, health care, and defense. When you pay your taxes, you need to know what taxes are used for. Government services are not free.” — Eric Toder

“Taxes cut poverty. Together, the earned income tax credit and child tax credit reduce poverty for families with children. They contribute substantially to tax refunds giving families the opportunity to catch up on bills, pay for emergencies, and purchase needed items like health care services and food.” — Elaine Maag

“The US is a low-taxed country. Taxes pay for things that people value—everything from education and environment to healthcare in the military—‘the price of civilization.’ [But] the extremely wealthy are able to avoid taxes on the lion’s share of their income. Almost everyone has some special status in the tax code. We could have a much better system if everyone would agree to give up their special status.” — Bill Gale

Tax policy is complex by choice.

“There is no perfect tax system.” That’s partly because defining and measuring income (our tax base) is incredibly complex. “Policymakers could make our tax system better” by effectively addressing questionable or counterproductive tax expenditures and pointless complexities. But “the goals of a good tax system (such as fairness, efficiency, simplicity) often come into conflict and different people draw different conclusions about how to make trade-offs.” — Len Burman

“Taxes don’t need to be this complicated. But they are because everyone wants their own special tax breaks. Congress could simplify the law but it would mean higher taxes for some households and businesses.” — Howard Gleckman

“Policymakers often use tax policy to reorder economic and social relations. But tax policy is a crude tool and frequently misses the mark, with unintended consequences. Every tax loophole has a constituency. Tax simplification has no constituency.” — Steve Rosenthal

You can (and should) help policymakers make better tax policy choices.

“Tax education begins at home. After my father died, my mother made me, her teenage daughter, sit with her while she worked on her tax return. Decades later, I realized she was teaching not only me but also herself about taxes. Too many people with simpler returns and simpler lives than my mother never even try—and, perhaps, become uninformed voters and sadly pass that legacy on to their kids.” — Janet Holtzblatt

“People should know the tax system is not just something that happens to them but something they have the power to shape. A lot of tax policy is determined by who shows up – and showing up with facts and analysis can help tilt the system toward doing more good.” — Tracy Gordon

So what is the most important thing an average filer should know? 

Tax policy touches everybody in unique, complicated ways, and each of us has a role to play in making it better. We just have to want to do it.

Happy Tax Day.

The Tax Hound, publishing once a month, helps make sense of tax policy for those outside the tax world by connecting tax issues to everyday concerns. Have a question or an idea? Send Renu an email.

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