Tax Day doesn’t usually make people smile. But this year, there’s something available that might be able to make you grin a little while contemplating April 15th. I’m talking about the new edition of “As Certain as Death: Quotations About Taxes,” a book compiled by Jeff Yablon, a tax partner in the Washington office of the Pillsbury Winthrop Shaw Pittman law firm.
To get a sense of why this not-for-profit book amuses me, consider this part of Yablon’s introduction: “It contains 2,051 quotations, a 584 percent increase over the 300 quotations that made up the first edition in 1994. That rate of growth exceeds even the rate of growth of the Internal Revenue Code over the same period, but not by as much as one might hope.”
And from Jay Leno: “The U.S. tax code is now four times longer than the combined works of William Shakespeare — 3.8 million words long. In fact, if Romeo and Juliet were alive today and tried to do a joint return, they’d probably kill themselves again.” Especially if they had to deal with the Alternative Minimum Tax.
And Michael Graetz: “The tax law is six times longer than War and Peace and not nearly as easy to read.”
This book is in fact growing like the tax code — but it’s far more fun to read. The new edition is about 320 pages, up from about 250 five years ago, the last time a new printed version appeared.
Then, as now, the book is published by Tax Analysts, a Falls Church nonprofit operation, which will send copies to subscribers of Tax Notes and its other publications, and will offer it to the public as a $5.99 e-book on Amazon, starting Apr. 13. (Consult your tax adviser to see whether you can deduct it.)
The book, unlike much of life, is improving with age. “When I first saw it, I thought it was a novelty,” said Chris Bergin, president of Tax Notes, who published the first version in 1994. “Now it’s a treasure.”
I got my advance copy a few days after getting my tax forms back from my accountant — an annual event that tests the efficacy of my blood pressure meds. This year, my federal return ran 33 pages, up almost 50 percent from 2010, when I wrote about the previous print version of Yablon’s book. Although my wife and I own no real estate other than our house, don’t own tax shelters and have only publicly traded securities in our portfolio, our return was filled with things such as Form 1116 (to compute our alternative minimum tax foreign tax credit) and Form 8801 (which shows we have a minimum tax credit carryforward — whatever that is — of $146 for 2015).
I pay foreign tax on dividends I get from my shares of Teva, an Israeli company, but thanks to our brilliant tax code, I don’t pay foreign tax on dividends from an Irish company, Seagate Technologies. I also don’t pay any foreign tax on dividends from my S&P 500 index funds, even though 30 of the companies on the list (including Seagate) are non-U.S. companies.
I had a far higher income last year than in 2013, but my marginal tax rate was lower. The reason for this strange situation? I wasn’t in the AMT phase-out bracket, which added 7 points to my marginal tax rate in 2013. (I think.)
I’m not thrilled by the amount of tax I paid — about 27 percent of my adjusted gross income — but not all that upset about it. What I hate is how Congress nickels-and-dimes me by eliminating some of my itemized deductions, chiseling me in various other ways, and afflicting me with the AMT rather than being honest and raising the stated tax rates.
I even found myself subjected to a seemingly esoteric problem brought to my attention by Jeffrey Levine, a Newton, Mass., CPA. Levine told me that tax forms from many brokerage houses that handled stock option exercises and other employee-benefit stock transactions had overstated employees’ income by mistakenly understating the cost of shares involved in those transactions. He said most brokerage houses aren’t correcting the mistake and aren’t required to.
Sure enough, after I filed my return, I got a corrected form from Fidelity, showing that the stock option-gain numbers on my original form were a bit higher than they should have been. But the difference wasn’t big enough to warrant asking my accountant to file an amended return, so I’ll just eat a couple of bucks.
That’s an example of how maddening and incomprehensible the tax system can be. Even to someone like me, who’s numerate and writes about taxes all the time.
Leading to two more of my favorite quotes (which don’t include the three quotes of mine that are in the book).
“As Forbes magazine with rare accuracy suggested a dozen years ago, tax shelter economics were so bad that nineteen out of twenty investments could only be sold to groups of doctors. The twentieth scheme was awful beyond belief and could be sold only to dentists.” — The late Martin Ginsburg, who made me laugh almost every time we talked.
“Tax havens are not the little parasites they once were. Would that they were merely whorehouses on the edge of town that could be easily shut down! So much money is sloshing through them, and their use is so pervasive, that they functionally constitute the banking system.” — Lee Sheppard.
And for all of my mockery here, taxes really are important. Witness the following:
E.J. Dionne Jr.: “If you support our troops, you have to support the work of the Internal Revenue Service.”
Bergin: “As a society, we will never be free of taxes — that is unless we all want to be bathing down by the river, catching our own dinner and freezing to death in the dark.”
Martin Sullivan: “Though many have tried, nobody can defy the iron law of budget gravity. It states: Deficits = Spending – Taxes.”
And from President Obama: “Over the years, a parade of lobbyists has rigged the tax code to benefit particular companies and industries. Those with accountants or lawyers to work the system can end up paying no taxes at all. But all the rest are hit with one of the highest corporate tax rates in the world. It makes no sense. It has to change.”
Too bad he hasn’t tried harder to change it.
Finally, there’s my favorite quote, which I also cited five years ago, from J. Mark Iwry: “No one who has witnessed tax lobbyists’ perennial infestation of Capitol Hill can ever again confuse the making of tax laws with the making of sausages: at least when you make sausages, you know the pigs won’t be coming back.” I couldn’t resist using this one again.
And on that note — Happy Tax Day to you and yours. If nothing else, this book will give you some good lines to use if you go out drinking on April 15th.