Can the government really expect you to understand your taxes?

“The Tax System is Only Incomprehensible to Some,” an essay by University of Cincinnati College of Law Professor Stephanie Hunter McMahon, analyzes whether the federal tax system is inherently incomprehensible.

A response to a new book, "Incomprehensible!" by University of Texas Professor Wendy Wagner, McMahon’s piece appears in The Regulatory Review’s Creating Incentives for Regulatory Comprehensibility series of essays which brought together scholars from law, engineering, political science, and economics to comment on Wagner’s thesis.  

The Regulatory Review is a leading source of law and analysis for the administrative law community, and it is important that the tax community be included within it.

“Tax is too often considered a specialty area little impacted by, and little impacting, other areas of law. That needs to change,” McMahon said. Tax is highly statutory but bound by the same administrative law rules as are other areas of law.

"As administrative agencies struggle to create workable regimes, they should learn from each other,” she said.

Wagner’s rubric evaluates the process by which the law and agency action become incomprehensible.

In her essay, McMahon applies that rubric to the federal tax system, showing that attempting to fit tax within the rubric highlights the issue that federal tax rules’ incomprehensibility depends upon how the relevant audience is defined. This is a task the government has yet to undertake. Thus, the tax system can learn from other agencies the need to define audience and other agencies can see how the IRS copes with multiple audiences in its creation of agency guidance.

Read the essay.