We welcome first time guest blogger Marjorie Kornhauser. Professor Kornhauser is the John E Koerner Professor of Law at Tulane Law School. She has created a tax literacy program. Like almost all tax practitioners, we occasionally get asked to speak at various functions where we play the role of tax expert to an audience that consists of individuals whose lives do not revolve around tax, but we are not the sole targeted users of project. The material that she has created can assist anyone called to present in such a setting. If we can teach more people about the tax system, maybe they will engage in a way that makes the system work better.
As we celebrate President’s Day and think back to George Washington who spoke of taxes in his famous farewell address and Abraham Lincoln who created the first income tax, today is the perfect day to contemplate tax education and what we should all know as citizens. The Washington Post just reported on her project. The article in the Post provides greater detail than this post about the information available through the project for those who find this of interest or want to use the materials in an upcoming presentation. Professor Kornhauser has put a lot of work into engaging with those who do not normally get information about how the tax system works. Congratulations to her on pulling this project together. Keith
In 2009 an H & R Block survey concluded that most American know so little about tax that they would flunk “Tax 101.” They didn’t know the difference between a deduction and a credit. Many didn’t even know the amount of taxes they owed. This tax ignorance—which still exists today—is not only widespread but dangerous. Not only does it create feelings of frustration, but it also engenders feelings of unfairness among taxpayers that can undermine the legitimacy of tax laws (and voluntary compliance). Tax illiteracy also constricts congressional ability to craft coherent tax policies to help solve critical problems in numerous areas such as education, energy, health and housing.
read more...Despite the fact that taxation is a critical component of both personal and national finances, financial literacy programs pay little or no attention to taxation. Moreover, most web sites and written materials about tax are geared to either sophisticated readers and/or to filling out tax returns. There are few, if any, resources available for ordinary people to learn about tax and tax policy. They need this knowledge in order to participate in an informed way in a rational debate about the future of American tax policy. Such a debate would facilitate tax laws that facilitate solutions to national problems rather than obstruct them.
Four years ago I started TaxJazz: The Tax Literacy Project to fill the huge tax knowledge gap. I began by offering real-time activities to schools and community groups. These activities have been led either by me, teachers, or Tulane Law Students trained by me. This February, I extended the reach of TaxJazz by launching its webpage TaxJazz.
The materials I have created to date address fundamental tax issues. Collectively titled Taxes, Society, and Fairness, these materials form a curricular unit that provides essential information (including vocabulary) about three main topics:
- Why we have taxes;
- Basic limitations on the taxing power;
- Distributive justice in the context of taxation.
Distributive justice is the heart of this material. In the course of analyzing the parameters of tax the materials examine the components of tax burdens (tax bases and tax rates) and familiarize the reader with essential concepts and vocabulary, such as the difference between marginal and effective tax rates.
Each topic contains an exercise that allows readers/users to grapple with the issues. The final exercise, for example, involves a city council which is considering several taxes in order to raise money for pressing infrastructure repairs. The readers (or for example, students in a classroom) role-play. First they act as associates in a consulting firm. Their assignment is to advise the city council as to which tax to choose. After they have given their advice, they then assume the roles of councilors who debate and vote on the tax proposals.
The materials do not guide the user to one “right” answer as to distributive justice (since there isn’t one). Rather, they help a user reach a personalized opinion based on information.
In the four years of its existence, TaxJazz and its Taxes, Society, and Fairness curricular unit has already been used by over 350 people between the ages of 12 and 80 in a variety of different settings including high schools, a city recreation department’s after-school program, and a community senior center.
I have just launched the TaxJazz website. Now any individual with a computer can easily access its non-partisan, non-technical tax information to help people participate in discussions about tax policy and problems facing the nation. So far, TaxJazz deals only with the basic foundational issues in Taxes, Society, and Fairness. It will add materials on particular tax issues and provisions that affect large numbers of people, such as education, housing, and health. Additionally, it plans to offer training for teachers, community leaders, and others who would like to lead discussions about taxation. Eventually, the site will provide all this information in a variety of formats ranging from traditional text-based information to videos and games.
Lao Tzu said, “A journey of a thousand miles begins with the first step.” The first step to moving the United States towards a better tax system is tax literacy. In a democracy, active voters influence their elected officials, but officials also influence the voters. Tax literacy gives the voting public the ability to ask officials and candidates informed questions and to demand substantive answers. Such an informed public can force a rational substantive debate about taxes rather than a rhetorical one.
There almost always is some sort of tax angle.
I once got a junior high sudiedce very captivated by informing them that the Rosetta Stone inscription was about tax administration. They had been studying the Rosetta Stone and Egypt a few weeks before.
This is a particularly good time for effective outreach to the public on tax topics of this kind. Although there were serious discussions of alternative tax systems in the major tax changes in the mid-1990’s – variously called consumption taxes, flat taxes, national sales taxes, value added taxes, etc. – there was little effort made to explain to “the people” the pros and cons of the alternatives being considered. Now, Congress and the Administration are about to propose what could very well become the biggest change in U.S. policy since WW-II. It’s highly unlikely that the politicians will provide a candid or easily understood explanation of the likely impact of their plans on various segments of the population. And the news media have shown that they’re not capable of providing non-partisan and understandable explanations of the pros and cons of any important governmental policy. I hope the academic experts, “think tanks,” and tax professional organizations will make a concerted effort to make the public aware of what’s being considered. But they needed to start this yesterday or last month or last year if there’s going to be any realistic chance of educating lawmakers [assuming there’s any significant number who are seriously interested in learning the important details] and voters about what’s at stake. Given the present level of partisanship in Congress, it’s much more likely that some half-baked plan will be agreed upon by the majority and railroaded through. Please reach out to the responsible media, interested groups, academics, and various interest groups and try to get their help educating regular people about the important considerations that should be taken into account before adopting major changes in our tax system. “Fairness” isn’t likely to be among the top considerations that influence whatever proposals are put forward by the politicians.