The other two however sound that they add a lot of complexity and proposal to add complexity to the tax code because of wage thoughts about fairness are what brought us the mess that we have right now. Any additional increases in complexity should come with a justification of why the increase in complexity is necessary.
Why do they sound that way?
Carrying deductions forward is quite complicated in my experience, and there are a ton of rules about what can be deducted from what. Paying people back when they have a negative tax bill is not complicated (and already done for many Americans who overpay throughout the year).
When you report taxes you already say what your basis was and when you bought the thing. Adjusting your basis by the risk-free rate amounts to looking up a single number and then multiplying it by the basis. But this change makes the investor neutral about when taxes get paid, so you could just remove the comically complicated list of rules that currently exist to control when gains are realized.
(I’m not sure if you’ve ever actually dealt with changes, but the cognitive savings would be huge under this regime.)
I think both of those are net simplifications. But the additional complexity from each of them is also completely trivial compared to the classification of types of income.
It’s possible that you can’t realize any of those simplifications (e.g. that you’d still need to classify all your kinds of income even if they are taxed at the same rate, and that we’d still maintain wash sale rules and so on) because the code is sufficiently ossified that pointless and irrelevant complexities will remain in there forever. But even in the very worst case, I think you are probably misunderstanding where the complexity and compliance costs of the tax code comes from, I don’t think this is a noticeable increase (and in $ value it would be totally swamped by savings for tax planning even if you weren’t able to simplify the code in all the natural ways).
Why do they sound that way?
Carrying deductions forward is quite complicated in my experience, and there are a ton of rules about what can be deducted from what. Paying people back when they have a negative tax bill is not complicated (and already done for many Americans who overpay throughout the year).
When you report taxes you already say what your basis was and when you bought the thing. Adjusting your basis by the risk-free rate amounts to looking up a single number and then multiplying it by the basis. But this change makes the investor neutral about when taxes get paid, so you could just remove the comically complicated list of rules that currently exist to control when gains are realized.
(I’m not sure if you’ve ever actually dealt with changes, but the cognitive savings would be huge under this regime.)
I think both of those are net simplifications. But the additional complexity from each of them is also completely trivial compared to the classification of types of income.
It’s possible that you can’t realize any of those simplifications (e.g. that you’d still need to classify all your kinds of income even if they are taxed at the same rate, and that we’d still maintain wash sale rules and so on) because the code is sufficiently ossified that pointless and irrelevant complexities will remain in there forever. But even in the very worst case, I think you are probably misunderstanding where the complexity and compliance costs of the tax code comes from, I don’t think this is a noticeable increase (and in $ value it would be totally swamped by savings for tax planning even if you weren’t able to simplify the code in all the natural ways).