The internal revenue code is nightmarishly complex, as illustrated by this video. Americans spend more than 7 billion hours each year in a hopeless effort to figure out how to deal with more than 7 million words of tax law and regulation.
Why does this mess exist? The simple answer is that politicians benefit from the current mess, using their power over tax laws to raise campaign cash, reward friends, punish enemies, and play politics. This argument certainly has merit, and it definitely helps explain why the political class is so hostile to a simple and fair flat tax.
But a big part of the problem is that tax lawyers dominate the tax-lawmaking process. Almost all the decision-making professionals at the tax-writing committees (Ways & Means Committee in the House and Finance Committee in the Senate) are lawyers, as are the vast majority of tax policy people at the Treasury Department and the Internal Revenue Service.
This has always rubbed me the wrong way. Yes, some lawyers are needed if for no other reason than to figure out how new loopholes, deductions, credits, and other provisions can be integrated into Rube-Goldberg monstrosity of existing law.
But part of me has always wondered whether lawyers deliberately or subconsciously make the system complex because it serves their interests. I know many tax lawyers who are now getting rich in private practice by helping their clients navigate the complicated laws and regulations that they helped implement. For these people, the time they spent on Capitol Hill, in the Treasury, or at the IRS was an investment that enables today’s lucrative fees.
I freely admit that this is a sour perspective on how Washington operates, but it certainly is consistent with the “public choice” theory that people in government behave in ways that maximize their self interest.
There’s now an interesting book that takes a broader look at this issue, analyzing the extent to which the legal profession looks out for its own self interest. Written by Benjamin H. Barton, a law professor at the University of Tennessee, The Lawyer-Judge Bias in the American Legal System explains that the legal profession has self-serving tendencies.
Glenn Reynolds, of Instapundit fame, interviews Professor Barton about his new book.
I freely confess that I’m looking at this issue solely through my narrow prism of tax policy. But since Barton’s thesis meshes with my observations that tax lawyers benefit from a corrupt tax system, I’m sympathetic to the notion that the problem is much broader.
One of the most quoted lines from Shakespeare’s Henry VI is, “let’s kill all the lawyers.” But rather than making lawyer jokes, it would be a better idea to figure out how to limit the negative impact of self-serving behavior – whether by lawyers or any other profession that might misuse the coercive power of government.
This is one of many reasons why decentralization is a good idea. If people and businesses have the freedom to choose the legal system with the best features, that restrains the ability of an interest group – including lawyers – to manipulate any one system for their private advantage. This new study by Professors Henry Butler and Larry Ribstein is a good explanation of why allowing “choice of law” yields superior results.
[…] Byzantine system is good for tax lawyers, accountants, and bureaucrats, but it’s bad news for America. We need to wipe the slate clean and […]
[…] Byzantine system is good for tax lawyers, accountants, and bureaucrats, but it’s bad news for America. We need to wipe the slate clean and […]
[…] Byzantine system is good for tax lawyers, accountants, and bureaucrats, but it’s bad news for America. We need to wipe the slate clean and […]
[…] Byzantine system is good for tax lawyers, accountants, and bureaucrats, but it’s bad news for America. We need to wipe the slate clean and […]
[…] Byzantine system is good for tax lawyers, accountants, and bureaucrats, but it’s bad news for America. We need to wipe the slate clean and […]
[…] Byzantine system is good for tax lawyers, accountants, and bureaucrats, but it’s bad news for America. We need to wipe the slate clean and […]
[…] Byzantine system is good for tax lawyers, accountants, and bureaucrats, but it’s bad news for America. We need to wipe the slate clean […]
[…] like such a good idea that only people who benefit from the current system would be opposed. Unfortunately, that describes the political class, upon which we’re relying to get such […]
This is one of the best blog posts that I have ever read
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The big problem is how to determine income. Lots of ways to skin that cat, some show more profit, some less. What really needs reform is the accounting profession and FASB.
The complexity problem is real, but it is just the top layer. You have to clean up the whole mess.
[…] (Link to Self Serving Lawyer Discussion CLICK HERE) […]
Right on, Paul.
I have been saying for years that lawyers should not be allowed to be legislators.
But my logic was a bit different from yours.
I have observed, over time, that lawyers make really lousy laws.
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I like the idea of Barton’s book and the introduction of this topic to the community of ideas. However, it could and should be taken another step.
Many of our legislators are also lawyers, passing laws for their own benefit. But in EX PARTE GARLAND, 71 U.S. 333 (1866), a decision which reveals the bias Barton discusses, the Supreme Court said this in their decision:
Attorneys and counsellors are not officers of the United States; they are not elected or appointed in the manner prescribed by the Constitution for the election and appointment of such officers. They are officers of the court, admitted as such by its order, upon evidence of their possessing sufficient legal learning and fair private character.
How does this benefit lawyers? The Constitution states that no senator or representative can hold any civil office in the United States while in the legislature. So, by the Court stating the the Court is not part of the United States, even though it clearly is, the Court has ruled into law what is clearly a conflict of interest. This conflict of interest needs to be recognized and dealt with.
Simply put, lawyers should not be allowed to serve in the legislature, at any level of government, without giving up all connections with the law. Even then there will be a bias toward lawyers, but it would be a start.
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