Weekly Columns

Tax Reform

Apr 11 2013

It’s been 100 years since the 16th Amendment was ratified, paving the way for a federal income tax. While changes to the tax code are routine, little has been done to make it easy and fair. 

From 2001 to 2008 there have been more than 3,250 changes to the tax code, an average of more than one a day, including more than 500 changes in 2008 alone. In recent years, the Taxpayer Advocate Service, a division of the Internal Revenue Service (IRS) that offers free assistance for resolving tax problems, identified the most serious problem as the complexity of the tax code. This is not surprising. 

For years, Congress has expressed interest in overhauling the tax system. Considering the U.S. tax code is more than 67,000 pages, it’s no wonder there is an effort to make it more fair and simple. I believe our current income tax system is fundamentally flawed and in need of major reform. Making serious changes to our tax code can help increase economic activity and address our national debt. 

In the meantime there are efforts to make it easier for the taxpayer. Private businesses have made it easier so we don’t have to spend countless hours preparing our taxes with a pencil, calculator and eraser. You’ve probably used some of those tax preparation services. The IRS also partnered with private online tax preparation businesses ten years ago to form the Free File Alliance. This program provides eligible taxpayers with free online individual income tax preparation and electronic filing services. 

This has been a valuable program for taxpayers and the federal government. This program provides an affordable option for taxpayers to file their tax returns and it saves the federal government money. According to the Government Accountability Office, Free File has saved the IRS nearly $105 million in processing costs. This is a good cost-saving measure that we should continue. That’s why I’m supportive of ensuring this program continues. We need to make Free File permanent to help reduce the complexity of filing taxes. 

Americans deserve an easy tax code they can understand. President Obama has stated that tax reform is a priority for him this Congress. I would urge him to work with Congress on a pro-growth plan that broadens the tax base, lowers rates, and closes the numerous loopholes that are regularly exploited. We need to eliminate these unfair advantages. At the same time, we must remember that the U.S. corporate tax rate is currently the highest in the world. If we further increase that burden on American businesses, it will undoubtedly result in higher consumer prices and fewer American jobs. We must fight to ensure that American companies and workers have a level playing field on which to compete globally and a system that does not put them at a competitive disadvantage with foreign corporations. Reforms can raise revenue to help reduce our national deficit and drive down our debt. We need to create a system that encourages business growth in the United States and decreases incentives to move jobs out of the country. Let’s consider reforms that will save us all time and money and clear up the confusion by simplifying our tax code.