President Obama and Speaker Boehner’s discussions aimed at avoiding the fiscal cliff will almost certainly result in the government collecting more taxes: either by increasing the rates paid by upper-income Americans, by closing loopholes that favor the wealthy, or a combination of the two.  Both sides of this debate invoke “fairness” in support of their position, but based on the dialogue (or lack thereof) in Washington, it appears that fairness, like beauty, is in the eye of the beholder.

Regardless of how the current debate is resolved, Congress appears to be committed to overhauling the Internal Revenue Code, which now runs an estimated 3.8 million words.  While there may be agreement that the Code needs a major revision, it remains to be seen whether Congress and the White House have the political will to accomplish this goal.

The government has long used the Code to promote certain types of economic behavior.  For example, by allowing homeowners to deduct mortgage interest payments, the Code promotes home ownership over renting.  After many years, however, such incentives become sacred cows and any suggestion that they be removed from the Code is met with stiff opposition.  All told, “tax expenditures” cost the government over one trillion dollars each year and while deductions for private jets and oil and gas exploration and production may be easy political targets, far more revenue is lost through the deductibility of charitable donations, employer-provided health care plans, 401(k) plans, and state and local taxes.  In light of the difficult choices that need to be made, it is easy to understand why the Internal Revenue Code has only been overhauled once since 1954.

In her 2011 Report to Congress issued earlier this year, National Taxpayer Advocate Nina Olson presented a separate argument for overhauling the Code.  Rather than relying on the need to raise revenues or addressing the policy choices that will have to be faced, Ms. Olson’s argument was far more pragmatic: the Code’s complexity strains the IRS’s limited enforcement resources.  Indeed, as I have written here, while the government loses hundreds of billions of dollars in revenues due to underreporting, non-filing and underpayment each year, the IRS simply lacks the resources to enforce the Code.

Thus, in re-writing the Code, Congress should be mindful of the fact that each additional loophole, deduction and tax expenditure makes it more difficult for the IRS to enforce the Code fairly and efficiently. And regardless of where one falls on the political spectrum, there should be general agreement that taxpayers should comply with the Code as it exists: even the most vehement opponent of the “carried interest” exemption that enables private equity fund managers to pay the lower (capital gains) rate would not argue that the benefit afforded to such taxpayers excuses non-compliance by others.