But those special exemptions aren&#x27;t the core driver of tax code complexity.  Rather, it&#x27;s the intersection of:<p>a) high (enough) rates, and<p>b) taxation of business income (where you must allow deduction of legit business expenses like inventory)<p>This spawns sort of an arms race where businesses try to classify consumption as a &quot;business expense&quot; so they can deduct it, and the tax authority has to respond with ever-longer lists of &quot;no you can&#x27;t do that&quot;.<p>One naive scheme might be for the boss to go around and say &quot;hey, what would you spend your next $50 on&quot; and then buy it, classify it as a business expense, and silently give it to them.  Then the worker doesn&#x27;t show up as having that income, but the company has the expense to deduct.  Now think about the regulatory apparatus necessary to prevent that, and any clever variant, from happening. (It&#x27;s also why fringe benefits were so lavish for high earners in the high-tax 50s.)<p>The higher the rate, the more activity is diverted into this (socially wasteful) activity.  Do you want high-IQ people designing self-driving cars or outsmarting the tax code?