Americans are breathing a sigh of relief that another tax season is behind us. All of the good cheer from the New Year evaporates as the calendar moves closer to Tax Day. Getting one’s financial affairs and tax documents in order eat up a lot of time and resources. Plus, more and more taxpayers spend a pretty penny on tax preparation fees to let the experts take a crack at making sense of the universally complex tax code.
It’s not a surprise that more Americans are turning to a professional to certify their tax returns. How could the average taxpayer be expected to account for tax laws that exceed 1.4 million words, breed 650 tax forms and feed 13,000 pages of explanation? Taxpayer complaints clearly are justified.
Now nearly 90 years after the federal income tax was approved, no one can dispute the federal tax structure in place today is an onerous system that begs for simplification. Of course, calls for simplification are much easier said than done.
As chairman of the tax-writing Senate Finance Committee, I held a congressional hearing in late April to examine specific complexities in the tax code and consider proposals to iron out some of these wrinkles identified in a 1,300-page report issued by the bipartisan Joint Committee on Taxation.
As Congress gets to work on legislation this year that will implement the president’s tax relief plan for every American who pays income taxes, it is clear we must also make every effort to simplify the tax code. Any new tax legislation ought to stick to three principles: fairness, efficiency and simplification. Congress ought to kill two birds with one stone by passing meaningful tax relief that also streamlines tax policy and makes it easier for taxpayers to follow.
People are fed up with income phase-outs, deductions and credits that must be navigated and double-checked every year in case a provision was allowed to 'sun-set' or lapse into a legislative graveyard. What’s even worse are the penalties that can come back to haunt taxpayers for unintentional oversights or mistakes.
The comprehensive study by the Joint Tax Committee will serve as a very useful guide for Congress as it charts tax policy in the coming weeks. Specifically, the report recommends that some tax breaks should be applied universally, including the $500 child credit, itemized deductions and credits for child care and education. It also suggests getting rid of the Alternative Minimum Tax and the 103-year-old telephone excise tax. As the lead sponsor of the HELLO Act, which would repeal the three-percent excise tax applied to every American’s monthly phone bill, I agree it’s time to say good-bye and hang up the tax that was enacted to pay for the Spanish-American War.
Iowans should know I take the tax simplification issue seriously. A tax system riddled with loopholes erodes public confidence, influences voluntary compliance and makes it harder for the IRS to administer the laws.
Plenty of lip-service has been paid to tax simplification over the years, especially during political campaigns. Too often, the well-intentioned calls for change are swept under the rug and swallowed by the beast that is Washington. It’s time for Congress to tame the beast and show some sensitivity to the tax code’s complexity.