Wednesday, April 8, 2020

Reviving this blog with gratitude and hope for the future

Fifteen years ago, in the late spring of 2005, I agreed to take over responsibility for teaching Union College´s Eco 391 class, ¨Income Tax Policy & Practice,¨ a service-learning class that involved supervision of the students in operating a Volunteer Income Tax Assistance (VITA) site at the college´s  Kenney Community Center, a building that had previously served as a somewhat notorious bar and grill.

Union College Kenney Community Center (formerly the Alps Bar & Grill)
in Schenectady NY (city with the 13th highest child poverty rate in the country)

Fifteen years later, I am still doing it.  It has been quite a ride.


I am grateful to my colleague, Professor Therese McCarty, for creating and launching the VITA  program at Union before handing it over to me when she became Dean and Academic VP of the college in 2005.  I am grateful to all the Kenney Center staff and other colleagues at Union who have supported the program.  I am grateful to all my students who have labored so hard to master the subtle intricacies of our nation´s tax system and conscientiously apply it on behalf of our clients.

Above all, I am grateful to the many client taxpayers we have had the honor to serve face-to-face in this cozy former bar & grill space:  each year hundreds of you have entrusted us with your confidence and provided a great deal of intrusive personal information we needed in order to prepare and quality review your tax returns.   We have treated that very sensitive information with the utmost care and confidentiality it deserves.  We are especially honored that so many of you have come back year after year.

We are in awe of the challenges that many of you face on a daily basis and we thank you for your patience with us and our meticulous process.  Thank you for keeping a sense of humor as we worked  together to do the best we could with the complex tax laws, which are at times quite arbitrary and unfair.  (Please know we are doing what can to advocate for needed changes!)

We know that some of you traveled to meet with us on multiple CDTA buses after a long workday on your feet emptying bedpans, driving forklifts, caring for disabled clients, helping special needs students, stocking shelves, driving school buses and many other challenges we can only imagine.  Some of you are homeless and live in shelters.  Many of you are caring for multiple generations, your children as well as your elders in frail health.  Some of you brought your children or elders along with you because they could not be left alone at home while you worked with us on your taxes.  It was an honor to meet everyone.

Please know that I have been thinking of all of you.

I imagine that many of you have lost your jobs and are worried about the future.  Others of you are still in essential jobs that require facing a significantly increased risk of contracting this terrifying disease and perhaps bringing it home to your family.  Many of you are cooped up in small spaces in these scary times.

My heart goes out to all of you.

I can not help with your health challenges (I am a ¨Doctor¨ with a PhD in economics, not a medical doctor!) but I will do what I can to help with your ongoing tax challenges.

Some of you have called to leave messages that you are being audited.  For reasons I will discuss in a subsequent post, most of those audits right now are New York State audits, not IRS audits.  Please know that I am checking voicemails daily and will call you back promptly to work with you remotely to help you assemble the supporting  documents you need to prevail in your audits.  (All of you received copies of your tax returns with my office phone number on it.  If you have lost your copy, you can find my contact info here.)

Some of you have questions about the COVID-19 stimulus payments or the status of delayed refunds.  I will call you back and try to answer those questions too.  I am sorry that our country´s complex tax system is adding to the confusion and uncertainty you face right now.

I hope we will be able to work face-to-face again in a future year, but nothing is certain right now, even whether I will still be alive in filing season 2021. I have so many fond memories of handshakes and hugs and shared joys and sorrows.

Reflections on the larger scheme of things and trying to find meaning in tax policy reform

Although I had been studying and teaching public finance theory since the 1970s, I was totally unprepared for the experiences awaiting me when I agreed to take over the VITA program in 2005.

For many years before 2005, I had been filing quite complicated tax returns for my own upper middle class household, including a Schedule C business and various types of investment income.  Before 2005, I blithely imagined that the low-income taxpayers who were the target clientele for VITA sites would have far simpler tax returns than my own family´s.  My daughters were enthusiastic when I told them of what I was about to do.  They said, ¨Mom, you will be great at this!  You are the income tax goddess!¨

Little did my daughters know, little did *I* (the so-called Tax Goddess!) know how much I had to learn.
  • Taxes for low-income VITA taxpayers can be far more complicated and trickier than those for higher income taxpayers
  • VITA tax refunds can be very large relative to taxpayer incomes
  • The biggest cash federal antipoverty program in our country has been operated by the IRS since the mid-1990s (and enjoys surprisingly broad bipartisan support)
  • Effective marginal tax rates for VITA taxpayers can be extremely volatile, making any kind of sensible tax planning extremely hard to do
  • Many tax breaks that appear to be targeted at low income taxpayers do not in fact serve them very well
  • Typical VITA taxpayers are far more likely to be audited than middle and upper middle class Americans
All of these issues, which existed in 2005, are--if anything--now worse in 2020.

It has indeed been discouraging.  I started this blog in 2008 as a way reflecting on subtle and tricky issues in the tax code that I thought should be exterminated in the name of simplifying and rationalizing our country´s tax system.  (If you are curious about the name of my blog, read this post.)

I had initially approached teaching this class filled with wide-eyed optimism.  In November 2005, a bipartisan presidential advisory panel issued a remarkably thoughtful report with a critically acclaimed blueprint for simplifying our country´s tax code.  I was also excited to discover that my college classmate, Nina Olson, the country´s National Taxpayer Advocate, was writing smart and sensible reports to Congress on needed changes to our country´s tax system.  

But for so many years, those sensible, thoughtful reports have seemed like voices crying in the wilderness.  Each year, the so-called ¨VITA bible,¨ the Pub 4012 has gotten longer and more convoluted and challenging to navigate as Congress passes more and more complicated tax laws affecting low-income American taxpayers.

My students have done an outstanding job of rising to the increasing challenges and assisting our taxpayers, but it feels like we are just sorcerer´s apprentices.  

It is heart-breaking to see the enormous amount of wasted energy that goes into compliance with a needlessly complex tax system that has caught up some of our country´s most vulnerable citizens.

And, so I had pretty much given up blogging here.  

What was the point in being just another voice crying in the wilderness?  Nobody in a position to make change happen has seemed to care about making our tax system more understandable, less Kafkaesque, and less stressful.

I am getting old.  I was still in my early 50s when I began doing this.  Now I am in my late 60s.

But I keep on keeping on with serving our local taxpayers, many of whom gratefully come back year after year after year.  I know that the work my students do relieves a lot of stress.  And I know my students learn a ton from working with them.

But is there any hope that I can be part of an effective movement for a fairer, simpler tax system?

I had pretty much given up on thinking so.

But in this topsy-turvy Coronavirus world run by an administration far more chaotic than anything I could have ever imagined back when I was a college student almost 50 years ago, I have somehow decided to begin hoping again and blogging again.

In large measure, a request from one of my Eco 391 students to do a reading and research course with me this spring term has given birth to renewed hope.  Carrie is a psychology major with an economics minor and she and I are both particularly intrigued by Nina Olson´s call for the use of a Taxpayer Anxiety Index.

In a world that has so much to be anxious about, particularly for those with the least material resources, why does our convoluted tax system have to add to the stress and anxiety folks are experiencing?

Thanks especially to Carrie for inspiring me to reflect and write in this way.  Carrie and her classmates and the 15 cohorts of VITA students who preceded them will likely be around far longer than I will be.  I hope and believe their VITA experience will inform their lives as citizens, professionals, and community members.

Stay tuned for more to come.  Whether *I* survive to serve again directly during filing season 2021 remains to be seen, but I hope some of my ideas for needed change will live on after me.

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