Tax Complexity

As Congress deals with various tax measures, the usual calls for tax simplication are made. So how complex is the federal tax system?

Complexity is a difficult concept to measure. One objective indicator is how words there are in the applicable tax laws. John Walker, of the site www.fourmilab.ch, has indexed the Internal Revenue Code and sets the number of words at 3.4 million. If Treasury Regulations are added in, add another 6 million words to the total, with the combined total approaching 10 million words. If you want to add in Treasury Department pronouncements, such as publications, revenue rulings, revenue procedures, private letter rulings, and other explanations of the law, the number becomes incalculable.

To put these numbers in context, there are 602,585 words in the Old Testament. In the New Testament, there are 180,552 words. So who has the more difficult job - bible scholars or tax attorneys? Even without the word differential, the Bible is static - the Internal Revenue Code and its interpretation is a moving target with the constant tinkering and revision of Congress and the Treasury Department.

As the Wall Street Journal noted in a November 1 article on the subject ("Taxing Words"), Ronald Reagan's 1986 tax reform cut the Internal Revenue Code in half, but it has since grown back like jungle brush, thicker than ever. Will this year's tax acts add or take away from the size of the Code? I think we can all predict the answer to that.