Monday’s tax filing deadline is quickly approaching, along with the dread taxpayers undoubtedly feel as they are obliged to comply with an IRS tax code that is unnecessarily complex. But imagine for a moment that April 15 was just another day, and that the IRS did not represent a significant challenge - the forms were neither multiple nor complex, and the visits to the accountant were shorter and more efficient.
It’s more realistic than you think. Under the Fair Tax Act (S. 25), of which I am a co-sponsor, the IRS of today would be significantly reformed, bringing a welcome end to the convoluted tax-filing process.
This legislation includes common-sense reforms such as:
- Replacing the federal income tax—including capital gain taxes, all payroll taxes, the estate and gift tax, and corporate and self-employment taxes—with a federal retail sales tax;
- Applying the tax only to the sale of new goods and services made to consumers; and
- Providing every household a monthly rebate check to cover part of the sales tax paid on essential goods and services.
These changes are long overdue, as there is no doubt that the tax code and the accompanying forms are burdensome, onerous, and unduly complicated. The vast majority of Americans now require professional help to fill out tax return documents.
Every year, the National Taxpayer Advocate highlights this complexity as one of the top 10 problems taxpayers face. The tax code is full of special-interest loopholes, and with every year that passes, American taxpayers spend more time and more money to comply with its burdensome provisions.
For example: There are currently 325 separate forms that taxpayers might be required to complete, and they spend 6 billion hours each year involved in their preparation. In addition, it is estimated more than $250 billion each year is spent to comply with the tax laws–creating a 22-cent tax compliance surcharge for every dollar collected. Finally, it is projected that taxpayers will spend close to $500 billion annually by 2015 just to pay their taxes.
Consider this: In 1955, there were 744,000 words in the IRS code. By 2000, this number grew to 6.9 million. And since 1986, there have been more than 15,000 changes made to the tax code.
By converting to a tax system that is transparent and simple, the Fair Tax Act would remove the complex tax burden placed on hardworking families, strengthen our financial system, and ensure that our economy remains the strongest in the world.
And while it is important for taxpayers to fulfill their obligation to fund the federal government, that process should be simplified as much as possible. The Fair Tax Act is an overdue, important step to reforming the current tax code relieving an unnecessary burden on all American taxpayers.
