Government

Do You Think it’s Time for Tax Reform?

Are there any politicians around with the guts to really tackle this absurdity? Probably not, but whose fault is that, it’s our fault for letting them get away with it. There are a lot more productive things that could be done with $233 billion a year I would think. 

This from the Tax Foundation 10-8-15. 

In a recent Pew poll, 72 percent of Americans said that they were bothered by how complex the federal tax system is. These taxpayers are justified in their complaints: as of 2015, federal tax laws and regulations have grown to over 10 million words in length.

This figure includes the federal internal revenue code (2,412,000 words long) and federal tax regulations (7,655,000 words long). It does not include the substantial body of tax-related case law that is often vital to understanding the tax code.

The length of the federal tax code is a good stand-in for the overall complexity of the federal tax system. After all, the more there is to know about federal tax law, the harder it is for Americans to file their taxes quickly or correctly.

Tax complexity creates real costs for American taxpayers and the U.S. economy. Americans spend 6.1 billion hours and $233.8 billon complying with the tax code. Due to increasing tax complexity, over 90 percent of taxpayers now hire professional tax preparers or use tax preparation software.

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Categories: Government

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5 replies »

  1. Yes we need tax reform… just not now. Turning this dysfunctional congress loose on the tax code, as bad as it is, would be like letting a group of monkeys fix your cars failing transmission.

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      • I don’t see congressional dysfunction getting any better in the near term. I am more concerned about tinkering around the margins which would increase complexity. With more complexity comes more distortion and loopholes. What we need is a major overhaul as in 1986 but that is out of the question in this political climate.

        If your major issue is tax simplicity, there are plenty of fine sounding plans such as a fair tax or a flat tax but you have to realize that like everything else in economics they have trade-offs. Are people willing to give up their favorite deductions or tax credits? Are we going to remove progressivity from tax rates? Are we going to be willing to supplement low income tax rates by adding a VAT tax?

        All these things need to be hashed out, now is just not the time.

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