In the midst of historic partisanship and inaction, our Congress has an unprecedented opportunity to get something done that benefits everyone. The mandate to reform our broken tax system transcends traditional political alliances. The first step toward true reform is simplification of our overly complex and burdensome tax code.
During my 30-year career in public accounting, my primary responsibility was assisting clients with their income tax filing requirements. The tax code has grown so complex, I found it was not uncommon for individuals to get conflicting advice from different tax professionals.
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When the Internal Revenue Code was first created in 1913, the entire text of the Sixteenth Amendment and the Revenue Act totaled a mere 27 pages. Today, taxpayers are challenged by almost 75,000 pages of the code and related regulations.
Over the years, the complexity of our tax laws has grown at an exponential pace. Congress has made more than 5,900 changes to the code just since 2001.
Congress has created a labyrinth that is so replete with special interest exceptions, deductions, and allowances, that almost every taxpayer is forced to pay someone to assist with their filing requirements. According to the Taxpayer Advocate Service, 94 percent of individuals used a preparer or tax software to submit their returns.
In fiscal year 2016, the IRS received 104 million calls seeking guidance. It was only able to answer 53 percent of calls received, compared with 87 percent in 2004. In those instances where they did answer the phone, the Internal Revenue Service employees in call centers were apt to provide inaccurate and inconsistent advice. In fact, the IRS itself and court cases state that you cannot rely on the advice given by IRS employees.
The burden on taxpayers is overwhelming.
President Trump pointed out that over 6 billion hours are wasted every year in tax preparation compliance. The IRS instructions estimate the time required for one form alone takes 42 hours of record keeping, 5 hours of learning the law, 7 hours of preparation and 15 minutes to send to the IRS. This may sound outrageous, but in practice it takes even longer than the IRS estimate.
The individual income tax generates 2.6 billion hours of paperwork from roughly 150 million tax filers. This equates to 17 hours per response, or roughly two workdays dedicated to tax returns. Additionally, the tax preparation costs are enormous.
Families shouldn’t need professional help to file their tax returns. Making the tax code simple, fair, and easy to understand means getting rid of the loopholes, deductions, and carve-outs written by lobbyists. (As a side note, do we really need 4,000 tax lobbyists in Washington?) Under the president’s proposed framework, Americans will be able to file their taxes on a single piece of paper.
It’s time for Congress to step up. Tax simplification should be an immediate common objective of all members.
This isn’t about Democrats or Republicans. We have a tax system that is inherently flawed and broken. If we want to renew our prosperity, restore opportunity, and reestablish our economic dominance, we need tax reform that is pro-growth, pro-jobs, pro-worker, pro-family, and pro-American — and it all starts with simplification.
Douglas Ammerman, a former partner at KPMG LLP from 1984-2002, serves on the Board of Directors of America First Policies.
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