Mr. President, Tear Down That Code!

In the Marx Brothers’ classic “Night at the Opera,” Otis B. Driftwood (Groucho) is negotiating the contract of a sought-after tenor with the singer’s slow-witted manager, Fiorello (Chico), when the subject of taxes comes up.

The ensuing conversation goes something like this:

Fiorello: Can he live in New York on three dollars?

Driftwood: Like a prince! Of course, he won't be able to eat, but he could live like a prince. However, out of that three dollars - you know - he'll have to pay an income tax.

Fiorello: Income tax?

Driftwood: Yes! You know, there’s a federal tax, and a state tax, and a city tax, and street tax, and a sewer tax.

Fiorello: How much is at come to?

Driftwood: Well, I figure if he doesn't sing too often he could break even.

Fiorello: Alright, we take it!

That parody of the 16^th Amendment came to mind this week as Nina E. Olson, the National Taxpayer Advocate, released her annual report to Congress and - for good measure - tossed in a number of mind-boggling statistics on the state of the U.S. Tax Code.

At four million words, the U.S. Tax Code is now roughly 10 times longer than the Bible and is so complex that nearly six billion man-hours per year are spent on compliance – or roughly the equivalent of about three million people working full time all year. Since 2001, Congress had instituted some 5,000 changes to the Code, an average of more than one per day.

Small wonder, then, that more than 60% of U.S. taxpayers use professional preparers while the remainder requires the aid of sophisticated software.

To put that daunting Tax Code word count into perspective, consider that the Gettysburg Address is 270 words, Section 404 of Sarbanes-Oxley is just 66 words, and, since we’re inviting religious comparisons, the Lord’s Prayer runs a pithy 70 words.

Olson ranked complexity as the most serious tax problem facing taxpayers in her report to lawmakers and urged an overhaul of the Tax Code, making it simpler and easier to comply with. For the first time in a number of years, there is a momentum building in Congress to revamp the IRC, but with a divided House and Senate, skepticism rightfully abounds that any type of compromise can be reached.

Only an 11^th hour agreement avoided the fiscal cliff and even then the bill eventually passed enacted just miniscule changes to the tax laws.

It needs to be brought to a reasonable size and scope and not be loophole-laden and littered with breaks and special interest provisions – perhaps more in line with the size of the USDA’s guideline to purchasing cabbage, which runs a mere 26,000 words.

Okay, maybe that’s a bad example. But even the Marx Brothers could tell you something needs to be done.