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Politics : Formerly About Advanced Micro Devices

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From: TimF	2/3/2016 7:10:24 PM
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Tax Day Lament: Bring Back Income Averaging! It’s April 15, a day that reminds us that the difference between December 31 and January 1 is enormous. Or, in my case, the difference between December 31 and January 24--the date in 2013 on which I received a book payment I was supposed to receive in 2012. That delay doubled my book income for 2013 while leaving some of the offsetting expenses, as well as a large charitable trust contribution, in 2012. It also meant that all of my book payment, instead of part of it, was taxed at a higher (though far from the highest) rate. In other words, I wound up paying extra taxes on the same amount of money. The difference between one year and the next wouldn’t matter so much if all income were taxed at the same rate. Before the 1986 tax reform flattened rates, people with fluctuating incomes could in fact average their incomes across years for tax purposes. Abolishing averaging went along with a simpler, less-progressive tax system. But the tax system has gotten more complex and progressive in recent years, making the arbitrary distinction between this year’s income and last year’s all the more unfair. (Year-to-year fluctuations don’t make a significant tax difference for the relatively few people who are always taxed at the top rate.) One special class of people still gets to escape the tyranny of the tax calendar. In 1997, Congress restored income averaging for farmers and ranchers. It’s even more galling to be taxed extra for Simon & Schuster’s slow payment knowing that if I were growing corn instead of writing books I’d be able to offset the good years against the bad ones. Posted by Virginia Postrel on April 15, 2014 vpostrel.com

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