I didn’t realize that we even had a National Taxpayer Advocate. Apparently she makes an annual report to Congress, although as our advocate, you’d think she’d make that report to us. If she does, she does a great job keeping it low profile in the press. Nonetheless, Nina Olson announces this year that our tax code is grotesquely complex. Duh. But some of her observations actually quantify the costs of that tax code, which is rather fascinating.

U.S. taxpayers and businesses spend about 7.6 billion hours a year complying with the filing requirements of the Internal Revenue Code.

If tax compliance were an industry, it would be one of the largest in the United States. To consume 7.6 billion hours, such a “tax compliance industry” would require the equivalent of 3.8 million full-time workers.

Wow. That’s an impressive burden, and one of the best quantitative arguments I’ve seen for simplification. However, as Olson says, simplification is almost impossible to implement because of the various special interest hooks into the political system. It almost seems that we need some non-political group to be assigned the task of “green fielding” the tax code and coming up with a new starting point. It would almost have to be agreed at the outset that we’d all have to live with the outcome. Of course we would allow Congress to then layer on additions and modifications as in the past, but it would force them to reconsider everything again, and they would be starting from having to vote special interest clauses in, rather than voting them out as part of the current restructuring process.

It’s all too often claimed that without such and such a deduction or credit that people wouldn’t behave one way or another. However, I personally think it’s sophistry to assume that the tax code incents behavior in any significant way. I doubt most people give to charity simply because it’s a tax deduction. Or that people buy houses, get married, have kids, start businesses, or invest in the stock market because there are tax incentives to do so. Ultimately, I think people are only concerned that taxes are fair. It’s not so much the raw amount that I pay, it’s more knowing that I’m not paying a disproportionate share over other people in my economic demographic. Maybe it’s overly simplistic, but I would welcome a graduated flat tax. That is, define what things count as income. Then assign tax rates to various income ranges. No deductions, no credits, no muss, no fuss. Just pay your taxes and get on with your previously scheduled life, already in progress.

Perhaps then, relative to the IRS at least, KISS could mean “Keep It Simple, Stupid” instead of an invitation for what they can do to your nether region.