Like most things relating to taxes, the question of tax complexity has no simple answer. Tax laws are written to promote fairness. Because people’s lives and social standings vary wildly, tax code must account for the variations. The same goes for businesses.
Taxes are also used as a means of influencing best practices.
The government tries to promote practices and technology that benefit modern society while deterring outdated and harmful methods. Tax code is used to reward and penalize accordingly.
Tax code must be enforceable, and so it’s written very thoroughly to avoid potential loopholes. If loopholes or sources of abuse are discovered, additional code is added on. While adding on laws and additions creates a longer, more complex tax code, it’s likely to create less issues than changing what’s already there.
Tax code is very interconnected, and so, changing one part could start a domino effect.
When new policies and laws are added, the tax side of them generally isn’t planned out. That means it’s up to the IRS to then account for any tax conflicts, once again adding complexity.
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