(FORTUNE Magazine) – "... if I am President, we're going to scour that tax code and make it simple and fair once and for all." -- John Kerry, September 2003

"In a new term, I will lead a bipartisan effort to reform and simplify the federal tax code." -- George W. Bush, September 2004

DON'T COUNT ON IT. OTTO VON BISMARCK, WHO KNEW something about politics, once noted that if you want to enjoy laws and sausages, don't watch them being made. A case in point: the piggish slop that is the recent corporate tax bill. Called the American Jobs Creation Act of 2004, it's a wholesale rejection of the kind of straightforward tax code both parties say they want. Instead of a brief, focused bit of legislation to get rid of an illegal subsidy, Congress used the opportunity to dole out corporate tax breaks for 200,000 "manufacturers"--a term folded, spindled, and mutilated to include coffee roasting, movies, shopping malls, and NASCAR. And while Republicans provided the most support, it was a bipartisan perpetration--majorities of both parties voted for it.

The problem is not that the 600-odd-page act (with 600 more pages of explanations) is an unwieldy aberration, but that it is all too typical. In America's swollen tax code there is nary an industry, an interest, or a hope that doesn't have a tax break aimed at it.

And there's the rub. It might not be possible to find an American who opposes the idea of a simpler tax code, but you can bet that when farm-state Senators went home after that vote, no one took them to task for getting more ethanol subsidies. Railroad executives would no doubt prefer a simpler code too, but there wasn't a peep from them about the weird little tax credit they got for maintaining their tracks. (Aren't they supposed to be doing that anyway?) And how can it possibly make sense to subsidize the purchase of both fuel-efficient hybrid cars and really big SUVs?

"The purpose of the tax system is to collect needed revenue at the least cost to the people," the recent Nobel Prize winner in economics, Edward Prescott, told the Wall Street Journal last month. That does not describe the current state of affairs. Instead, the 60,000 pages of the U.S. tax code has become a kind of chicken soup for the American soul, the way we try to solve every problem, social or economic, real or imagined. It is complexity that allows, say, a ketchup heiress, to legally shelter so much income that her tax rate barely hits the double digits. Or allows dozens of big, profitable companies to escape paying any corporate tax at all, while small business overpays by the billions. Complexity is why Americans spend something like $100 billion a year in time and accountants' fees to figure out their returns.

Polls routinely show that Americans favor a simpler code. But simplicity's appeal is abstract. Complexity, in the form of tax breaks for all, is adored in real life. To go really simple--a flat tax, for example, or a national consumption tax--would require losing much-loved deductions, such as those for mortgage interest and child care. Faced with such choices, enthusiasm for simplicity shrinks. "Everyone wants their own subsidy," says William Gale of the center-left Brookings Institution. "There is no organized lobby in favor of simplicity."

A perfect tax code--one so simple that tax returns would fit on a postcard--may be fantasy. But a better tax code is not, and doing nothing to improve it is not an option. Just don't expect Congress to make things easy. At the very least, Congress is going to have to deal with the dreaded alternative minimum tax, which is about to hit the middle class. Apart from the AMT, there is certainly some low-hanging fruit out there--half a dozen different education subsidies, for example, one for each tax bracket. One good subsidy should do the trick. There are also at least six types of IRA, which is about five more than necessary. A huge improvement would be to tax capital gains and dividends at the same rate as ordinary income. That would cut down on the use of tax shelters significantly, since so many are designed to convert income into capital gains, which are taxed less.

As FORTUNE went to press, the election was a few days off. But this is one issue on which neither candidate can be expected to do what needs doing. Kerry littered his campaign with a bewildering variety of promises of incentives, credits, and deductions. So did Bush, and despite his talk about the need for fundamental tax reform, the record of the past four years does not inspire confidence that simplicity is a likely outcome. In a sense, that's hardly their fault. When it comes to the fatted tax code, we have met the enemy--and it is us.

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