The U.S. tax code today is complicated, unfair, and punishes everyone from families to employers trying to compete in the global marketplace. Instead of promoting economic growth and enhancing our international competitiveness, it does just the opposite. In short, it's hurting our economy.
The tax code consumes more than 71,000 pages and it gets longer all the time.
Individuals and families spend more than $6 billion simply trying to file their tax returns, with more than 90 percent of our citizens forced to retain a paid tax preparer or utilize income tax software in order to meet their obligations.
It's so complex that even the Internal Revenue Service (IRS) commissioner cannot prepare his own tax return. How can middle-class families expect to comply with a tax code that the IRS commissioner finds too difficult?
The IRS says the average person spends 21.4 hours filling out tax forms. A USA Today editorial lampooned the complexity by noting that the instruction booklet for Apple's iPad is one page, while the instructions accompanying the IRS 1040 long form consume 172 pages.
And, the IRS has already announced that it is behind schedule for the upcoming April 15th filing deadline because the Congress and President waited until the waning days of last year before reaching agreement on legislation extending existing tax rates for another two years.
Calling our tax code "an anchor" around the neck of our people, our businesses, and our economy doesn't do justice to the enormous dead-weight it represents.
It's well past time for the Congress and President to put aside their respective political interests and work together on a major tax reform package. And, the guiding principle of this effort must be tax simplification.
Income tax compliance costs for the business sector exceed $150 billion annually. Tax simplification can help create new jobs by allowing businesses to re-direct these funds for better usage.
Businesses won't waste this money attempting to comply with our broken-beyond-repair tax code, but rather dedicate these funds to design better products, expand their production facilities, or hire more workers.
Also, tax simplification will help U.S. businesses sell more services or goods to consumers around the world, and help led to renewed job creation and economic growth through higher export levels.
Finally, our businesses increasingly find themselves competing in a global marketplace, not just a North American or European marketplace. Increasingly, businesses from China and India are becoming more competitive with U.S. businesses.
Very shortly, the United States will have the highest corporate income tax rate among its key industrialized allies. This will shackle our businesses, as they attempt to compete globally with businesses that pay lower rates. Over the long term, this puts our business sector at a competitive disadvantage, which needs to be solved.
I call upon President Obama to make tax reform and simplification a high priority this year. He can and should outline his vision for a simpler, fairer, pro-growth tax code to the American people in his upcoming State of the Union speech.
Both parties in Congress should work together on a new tax code that creates jobs, revitalizes our economy, and helps America resume her rightful role as the leader of the global economy.