Taxing Information

Published by Lex on

The information related to income tax collection is kind of fascinating. It is so precise and formal on one hand, and amazingly arbitrary on other hand. Yet somehow, it is all presented like there is some grand design behind it all. In many respects, the tax code is an example the bolt on strategy.

The way different types of income are classified is interesting too. The classifications are just another example of imperfect information masquerading as some type of reality.

Trying to take a simultaneous snapshot of every taxable entity’s economic activity for the past year in a batch data collection effort makes perfect sense in a rational world.

It is wilder still that so many organizations have to track data and report it so it can be assembled in a report that determines if you have paid in a large enough percentage of your income.

The annual information of income tax collection is an amazing orchestration law making, rule encoding, interpretation of those rules, collection of data, compulsory reporting of that data, and then an action based on that result — only to be repeated every year with changes in each of those dimensions. And there are audits….

While software has made the process a bit easier, it is still far from automated and requires many specialists every year.

While taxes may be necessary to provide government services, I often wonder if this is the best way to collect those funds.

 


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