Tax season is upon us. As I scramble around to get all of my papers in order to send to my accountant, I can’t help but think that there has to be a better way. To pay taxes I mean; my complete lack of organization is a lifetime struggle. I know several folks here in Alabama who have started their own small businesses. Many of them have asked me for advice on taxes and complained about the ridiculous record-keeping requirements they face. I always advise them to hire an accountant and then explain that income tax was one of my worst classes in law school. The reason being that much of the code is inscrutable. Several problems that arose during the semester even stymied my professors, who had been practicing and teaching tax law for years.

With all of this in mind, I wonder how many small businesses (think really small, like one-person fruit stands, web-based businesses, etc.) never come into being because of requirements related to paying taxes on earnings (not to mention the other regulatory hurdles such businesses face). A simple national sales tax would certainly impose costs on business at all levels, but I think that it might be enough of a reduction in record-keeping compliance costs to encourage more would-be entrepreneurs to start a small business. Just thinking out loud here.

The title of this post, of course, is a lyric from The Beatles’ Taxman. I don’t know if George Harrison, Taxman’s primary author, ever heard of Art Laffer, but I swear that I heard him in a radio interview say something about how the government would reap more revenue if they lowered the rate of taxation on incomes, so that people like him and his bandmates wouldn’t have to transfer their wealth out of the country in order to shelter it from the taxman. This interview took place in the 80’s, I believe, and featured George using the word bloody a lot when describing the tax-bill shock he and the other Beatles got when they realized that top earners like themselves only kept about 5 percent of their income after taxes. It was enough to drive George to write a song about it and move his assets out of the UK. I have tried and tried to find that interview to no avail. Does anyone else know where to find it?