A Fine Mess

I just finished reading A Fine Mess: A Global Quest for a Simpler, Fair, and more Efficient Tax System by T.R Reid. The book is very well written and delves into what is behind many things about taxes which frustrate many of us. It made me think about some of my experiences and opened my eyes to the big picture behind our tax system.

I have been doing my own tax returns for more than 60 years. Each year it gets more difficult. It is not because I am getting older but because the tax returns get more complicated. An example is the Form K-1. Form K-1 tells you your personal share of a partnership’s taxable income, deductions, and credits.

Since I retired from IBM at the end of 2001, I have been investing in partnerships which focus on startup companies, my favorites. At tax time, I don’t have to report on the partnerships but rather on the individual companies the partnership had invested in. The partnership passes on the financial results for each of the startups on a Form K-1. I receive more than 50 of these. TurboTax can not import the K-1s. I have to enter them manually. It takes hours. I should not complain too much because I was an investor near the beginning of the emergence of Uber, Roblox, InstaCart, and others which have been barn numbers.

In 2021, the IRS added the K-3. Schedule K-3 is an additional, detailed attachment which may be provided when the partnership has international components. It focuses on rules, especially foreign-source income and foreign tax credits. The K-3 is not applicable for the majority of times but it is necessary to go through it. Each K-3 has 13 sections and is 21 pages long.

The IRS currently lists 3,127 distinct forms, instructions, and publications in its online catalog. A complete working library—including rules, official guidance, and court interpretations has grown into tens of thousands of pages. The final enacted One Big Beautiful Bill Act—H.R. 1, now Public Law 119-21, in the version Congress passed and President Trump signed on July 4, 2025 is 940 pages long

Americans spend well over $100 billion a year out of pocket on tax preparation and filing—including paid tax preparers/accountants, tax software, and related filing costs. When you add the value of the time people and businesses spend complying with tax rules, the estimated annual economic burden is roughly $477 billion to $536.

Every year, politicians and Presidents have talked about simplifying our tax system. Every year it gets more complex. Needless to say, tax lawyers, tax accountants, tax filing services, and tax software companies strongly lobby against tax simplification.

T. R. Reid wrote about the expense, mistakes, and frustrations which accumulate over time. He also said our tax system is pernicious and corrupt. I downloaded the One Big Beautiful Bill and was looking for something I was curious about. I stumbled into a clause which essentially said no legislation will be passed which could impact the sugar industry. That is just one political insertion of many by both parties. As T.R. Reid said, “A Fine Mess”.