I and others have written tomes about the complexity of the tax code and the burdens that tax law complexity imposes on taxpayers and the IRS alike. Taxpayers (and tax professionals) are often left wanting to pull out their hair, and comedians often mine the tax code for fresh material, especially during tax season.
In my recent report to Congress, I identified one issue that’s a poster child for tax law complexity.
To illustrate the absurdity of the issue, let’s start with an analogy. Have you ever gone into a supermarket to buy a gallon of milk and seen the following sign?
Price of a Gallon of Milk
College Students $2.00
I have never seen a sign like that, and I’m guessing you haven’t either.
Yet this is a close analog to the rules governing the deduction for automobile expenses. One would think the cost of operating an automobile (i.e., gas plus wear and tear) would be the same regardless of the circumstance. Yet the current standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical transport, or military relocation purposes are as follows:
Tax Deduction For Automobile Usage
Taxpayer/Purpose Deduction Per Mile
Business Use 65.5¢
Charitable Use 14¢
Medical Transport/Military Relocation 22¢
There are times when tax professionals analyze the intricacies of seemingly absurd legal distinctions and almost see them as logical – until they have to explain them in plain language to a client.