by Joseph J. Thorndike
Republicans love postcards, at least when it comes to tax returns. “We’re making things so simple that you can do your taxes on a form the size of a postcard,” promised House Speaker Paul D. Ryan, R-Wis., at a November 2 news conference.
By most accounts, Ryan and his colleagues failed to deliver on that promise. In fact, many commentators have dismissed the postcard return as a pipe dream — “A G.O.P. Promise Marked Undeliverable,” to borrow the words of a New York Times headline.
However, the postcard tax return isn’t just possible — it’s actually been done. Doing it again isn’t just possible; it’s also straightforward. And probably a good idea.
On some level, the whole notion of a postcard return is ridiculous, not to mention anachronistic. In a world where the vast majority of taxpayers file electronically, why are we still talking about mailable forms? And do people even send postcards anymore?
Revealingly, even postcard return promoters don’t seem to take their promises literally. When House leaders released their mock-up of a new, pint-size return, they put “postcard” in quotation marks. Wink, wink.
In talking about postcard returns, GOP leaders also tend to hedge their promises a bit, referring to “a large postcard” (Treasury Secretary Steven Mnuchin), “a form the size of a postcard” (Ryan), or even “one page, one card” (President Trump).
These equivocations haven’t gone unnoticed by skeptics of the postcard promise. “Despite real efforts — and some successes — at simplifying the tax code, American taxes won’t come close to fitting on a postcard,” wrote Danny Vinik for Politico back in November. Jim Tankersley of The New York Times was even more direct: “The Republican tax bill does not pass the postcard test.”
Republicans offered critics an easy target when they released that aspirational “postcard” return. They kept it simple by ignoring inconvenient but very real complexities, like how to define the “specified savings plans” mentioned on one line, or how to calculate the various credits listed on three other lines. “To make either of these provisions work, you would, in practice, need to work with some additional forms,” pointed out Matthew Yglesias on Vox.com. “The postcard would just be a starting point.”
The critics are right, of course, but it’s a mistake to simply dismiss the postcard return as a gimmick, even if the draft version is less than fully functional. Postcard returns are more than a rhetorical flourish or even a convenient talking point. Taxpayers actually respond to the idea, as House Majority Whip Steve Scalise, R-La., noted in an interview last year with The Washington Examiner. “For over 90 percent of Americans, they literally will fill out their tax return on a postcard,” he predicted confidently. “That gets people excited about the reform.”
I’m not aware of any polling that can verify Scalise’s claim, but the durable popularity of postcard returns among GOP thought leaders — it’s been a fixture of most Republican reform plans since at least the 1990s — is revealing. If Republicans know anything, it’s how to use tax reform as a tool for maximizing votes.
Moreover, modern Republicans weren’t the first to realize the potential of a tiny tax reform. The idea got its start in the 1950s when IRS Commissioner T. Coleman Andrews introduced the first actual card-size return.
Which Form Are We Shrinking?
Both fans and critics of the postcard return tend to think in terms of the iconic Form 1040. That version of the individual return made its debut with the income tax in the 1914 filing season. Not even its numbering has changed. (More on that later.)
However, any sensible discussion of postcard returns would begin with a consideration of simpler forms, like the 1040A and 1040EZ. Both are notably less complicated than the standard 1040, and the 1040EZ could probably be made to fit on a postcard.
In the early 1950s, Andrews came to the same realization, and he supervised the introduction of a revised Form 1040A that was explicitly designed to fit on less than a single page. (The Form 1040EZ was not an option for miniaturization at the time, since it didn’t appear for another quarter-century or so.)
In the fall of 1954, Andrews held a news conference to announce all the new forms being released by the IRS. The standard Form 1040 was getting slightly more complex that year, thanks to the newly enacted landmark revenue law, which offered taxpayers some new perks at the price of added complexity.
For taxpayers who could file a Form 1040A, however, the news was better, at least in terms of simplification. (The form was only available to taxpayers earning less than $5,000 annually — about $45,600 in today’s dollars — whose income consisted entirely of wages reported on a Form W-2, plus a maximum of $100 in other wage, interest, or dividend income.)
“The short form (1040A) for persons whose sole income is from salaries or wages totaling less than $5,000, is little more than a postcard,” noted The Chicago Daily Tribune in a story on the press conference. “The user is asked to do only one problem in arithmetic — to count his dependents and add up the number of exemptions to which he is entitled.” Even that calculation was optional because the IRS was willing to do it on behalf of filers and send them a bill.
Andrews told reporters that the Form 1040A was a sign of things to come, “the first step” toward a return-free system for wage earners of modest means and uncomplicated financial arrangements. Andrews even predicted that a return-free system might be operational within a year.
Sadly, it was not to be. In the meantime, however, the IRS continued to trumpet the Form 1040A as a triumph for simplification and efficiency. The agency referred to it as a “card” return, in testament not just to its size, but also its processing.
The form did indeed fit on two sides of an oblong card, but it was somewhat longer than the typical postcard mailed from Miami Beach. That’s because it wasn’t in fact a postcard at all, but a “tabulating machine card.” The introduction of the form reflected major innovations in return processing, including the creation of a new, mechanized processing center in Kansas City, Missouri, that handled the cards from nearby districts. The card-size Form 1040A also came with a happy bonus for taxpayers, at least initially: more time to pay.
If taxpayers were disinclined to calculate their own tax liability (using the associated tax tables printed in the instructions), the IRS was happy to handle the task. The taxpayer sent a completed form to the IRS, leaving blank the section on taxes due. The agency then processed the return and responded with either a refund or a bill. For those owing money, that meant some extra time before having to pay up — at least 45 days, according to press reports.
During the 1955 filing season, 14 million taxpayers opted to use the card return. IRS officials claimed another 16 million probably could have used the form but opted for the full Form 1040 instead.
The Form 1040A remained card-size for a long time. In fact, it did not become page-size until 1977. A few years later, the Form 1040EZ made its debut, and although simpler than the Form 1040A, it too was printed on a full-size sheet of paper. Notably, both the 1040A and the 1040EZ benefited from this extra space because the last few card-size returns published in the 1970s were crammed with enough information to make them hard to navigate.
Time to Try Again
Still, the fact remains that postcard tax returns were a fixture of the federal filing season for nearly 20 years. Most taxpayers didn’t use them, but many did. Within a few years after they disappeared, Republican tax reformers began talking up the idea of a new postcard return, thanks chiefly to the surging popularity of the famous Hall-Rabushka flat tax.
It might be time to try again. The effort would be modest: The current Form 1040EZ is just a postcard waiting to happen. With a little creative page design, it could readily be made to fit on a generously sized postcard.
Which brings me to my free advice for Charles Rettig, in anticipation of his Senate confirmation as the new IRS commissioner. Take a page from T. Coleman Andrews and make card-size tax returns great again.
Of course, the instructions would be a problem. They are 45 pages long, which seems like a lot for a two-page form. In 1955 the card-size Form 1040A came with just two pages of instructions. That’s probably impossible today, but what about following the lead of the electronics manufacturers and developing a “Quick Start” guide?
While we’re at it, how about renumbering the new postcard-size Form 1040EZ and calling it Form 1? The whole 1040 naming convention is simply an artifact of bureaucratic inertia; according to former Commissioner Roscoe L. Egger Jr., individual tax forms got the 1040 designation in 1913 simply because that was the next number in a long-defunct numbering scheme. It has no inherent significance, and its irregularity simply raises questions. Among other things, it implies (falsely) the existence of at least 1,039 other forms that a taxpayer might need to worry about.
Of course, these changes would be purely symbolic, but symbols matter, at least when it comes to politics and governance. They are especially important in aspects of governance, like taxation, where success depends on the cooperation of the governed.
No one would dispute that the tax system is complicated, despite some of the genuine simplification included in last year’s tax law. But in those rare moments when the tax system really is simple, why not underscore that happy fact?