I really like the idea of the We The People site. The bulk of the most popular petitions maybe not so much. You have to scroll down a bit to come to a tax related petition of interest. Repeal DOMA. I signed that sucker. (I know DOMA is about much more than taxes, but that is the part I have been writing about). I think the the thing to do with the Westboro Baptist Church, which is the focus of several of the most popular petitions, is to ignore them. Clearly there are a few hundred thousand people, who think otherwise.
What I Would Like To See On We The People
What I suggested in a previous post is that people who have spent a lot of time looking at tax returns, following tax litigation or in some other way studying our existing tax system put up some tightly focused petitions that might contribute to the cause of simplification. Ideally they should be, at least arguably, revenue neutral or in the case of egregious abuses revenue positive. It is easy to say we should get rid of the AMT or the estate tax or as one petition puts it: Replace the federal income tax code with a simple flat tax!, but the devil is in the details. It is distressing to think about it, but everything that is there is there because somebody thought it was a good idea. A lot of the more complicated provisions like the at-risk rules and the passive activity loss rules are responses to complicated schemes that people devised to frustrate a previously simpler tax code.
A Good Example
My friend Robert Baty inspired me in this. He put up a petition to repeal Code Section 107. It will not be searchable on the site until it gets 150 signatures. Code Section 107 allows “ministers of the gospel” to receive a tax-free housing allowance. There is no dollar limit making for televangelists and mega-church ministers using tax deductible donation to fund out-sized tax-free housing allowances. The definition of “minister of the gospel” is also rather elastic allowing for “basketball ministers”. Bob was an IRS Appeals officer and he has carried the fight against the “basketball minister” travesty into retirement. Personally I think that Code Section 107 should be reformed a bit rather than repealed, but I signed the petition to help the discussion along.
My First Petition
I decided that if I was going to challenge my readers and fellow tax bloggers to put up some tightly focused tax petitions, I should do a couple myself. Here is my first one:
Get The IRS Out Of Defining Family
Our tax code’s system of individual taxation is based on the typical American family of the 1950s. Significant simplification could be achieved by replacing the current four individual filing statuses with one and replacing personal and dependency exemptions with a single freely transferable credit.
Details
1. One filing status for individuals
2. No deductions for dependents
3. A freely transferable credit designed to achieve revenue neutrality with the current system. Credits of dependent children allocated by agreement of custodial parents, but defaulting to the mother if no agreement is reached.
4. Earned income taxed to person who earned it regardless of state community property laws.
Why This Is A Good Idea
The main objection to this proposal is that if it went through the Tax Court might have to lay off a couple of judges. I at least look at every Tax Court decision and read most of them entirely in order to be able to write about a few of them. In the last couple of weeks there have been four decisions about dependency deductions. “Innocent spouse “cases, where someone sees the dark side of joint returns are a regular occurrence. Then there is the mucking fess that conflicting laws about same sex marriage have created.
I really don’t have a lot of hope that this petition or my next one are going to get very far, but I want to let you know the type of thing that I have in mind. I will write a post about any tax petitions that have this type of focus regardless of whether I agree with them or not.
You can follow me on twitter @peterreillycpa.
Originally published on Forbes.com Dec29,2012
