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Unintended Consequences

The Law of Unintended Consequences will sprout up in most changes implemented in our financial system. I’d think the guys at Freakonomics would appreciate some of the times this becomes obvious. In Barrack Obama’s tax plan he offers:
“The IRS would send prefilled tax forms to 40 million workers who take the standard deduction and have a bank account. They would simply have to sign and return it, which Obama estimates would save more than $2 billion in tax preparer fees, 200 million hours of work and “an incalculable amount of headache and heartburn.”

Now, I’m all in favor of simplifying our tax code, but looking at these numbers, the math says the average return costs $50 (can that be right?). So these certainly aren’t being done by CPAs, more like H&R Block storefronts with seasonal help. If these people make $25 an hour, that’s 40,000 people (assuming a seasonal job that runs just 1000 hours a year) out of a job. Simplify the return, put 40,000 part time workers on the unemployment line. There’s a trade off, I’d say. This is one topic, The Law of Unintended Consequences, which, among others, I plan to revisit. It’s easy to find if you just look.

JOE

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