Tax Post 2: How the Effect of Taxes on Economic Stimulus is Nil

I'm still enjoying tax class, but it has gotten MUCH harder.  And if anyone can point out an answer manual for the South Western book, I'd appreciate it.  I saw a "study guide" for it, for $40, but it's difficult to say whether or not it includes the answers to the practice questions.

I never understand why they don't just include the answers.  How else are you supposed to know if you're right or not?

Anyway, I've been thinking a lot about taxes.  One of the big things you learn in Macro and in Tax is that there is a very serious societal element in how we structure our tax codes.  So for example, the fact that Child Support is considered an exclusion for gross income is a sop to both working mothers, and divorced working dads.  The fact that there is something collegially known as the Innocent Spouse rule, a way for abandoned spouses to file as heads of household instead of married filing separately, which has a lower standard deduction, than head of household, allows an abandoned spouse to keep more of her income.

Ok, now as a RavingLeftatic, I think these things are nice.  But we come back to something that I touched upon in my first Tax post, namely, the concept of equability.  On the surface, these tax breaks are great.  But I'm a fairly intelligent guy, fairly well educated guy, and I don't know about half of these things.  And I could rightly be accused of stereotyping.  But give me a break, is it crazy to assume that in a nation where 28% of the populace believes that the moonlanding was staged, wouldn't know how to do their taxes?  Now, to be fair, as a single white male, I am taxed the absolute highest of any category, so the reason for my lackadaisical tax attitude might well be simple ignorance based on use.  I might well have dependents in the near future, dependents possibly including my older relatives.  How many low class, middle low class people know about the qualifying relative tests, or can perform the gross income test.  I'm reading the damn tax book and I can't figure it out.

I would certainly admit that there are some who do take advantage of these things.  And certainly, many of those people simply go to H&R block to get their taxes done because they can't be bothered with it.  But who can say how effective that is?  Roughly 65% of taxpayers use the standard deduction, 22 million Americans and Canadians filed with H&R block in 2007.  That's not a huge percentage, but it could easily include the poorest caste of American life.  Of course, the poorest caste don't even have to file if they're under the Standard Deduction limit.

Anyway, my point is this.  If taxation is supposed to have successful influences on society, than there has to be a real bias toward the middle class and the rich, people who can afford to hire a professional, or take the time to figure out how to best manipulate the tax code to best fit their situation.  That, and as we discussed from Macro, the multiplier for a dollar of tax released back into the economy is much lower than the value of a dollar directly spent.  So the next time, some pundit shouts from the mountain top how they provided a great tax break for working moms or some such, ask him if that money would have been better spent actually providing services and job training for that working mother.