But tax systems do not have to be complicated. Declare given income and assets and tax it with a defined percentage is a task for 12 years old – so why most graduates fail to do it. The code gets complicated mainly by adding uncountable exceptions, discounts, deductions, etc. for specific interest groups. Lowering taxes for a particular group is very attractive for politicians – streamlining the whole system is not, even though the society as a whole would win tremendously. The reason for this unfortunate logic is that simplifying a tax code always means abolishing a certain amount of special rights. The losers can be very exactly identified and are very determined and well organized opponents allying with other special interest groups. The potentially winners on the other hand although being a majority can hardly organize themselves because they are a very heterogeneous and diffuse group. Conclusion. Tax systems in the US and Europe are very hard to reform and the wealthy (often paying even less than the middle class) do not have to fear that their numerous tax loop holes are closed down anytime soon.
Source: Economist
