Simplifying the Tax Code a Top Priority
by Congressman Steve Chabot
January 27, 2005
As I recently took the oath of office at the beginning of the 109th Congress, I was encouraged by the reformist agenda being discussed by the President and Congress. One of the major issues expected to be debated is fundamental tax reform. Finally, Washington is beginning to recognize that an overhaul of our tax code is long overdue.
Over the last couple of years, Congress has successfully reduced taxes for working Americans - cutting taxes across-the-board, expanding the 10 percent tax bracket, increasing the child tax credit to $1,000 and providing relief from the marriage tax penalty. However, Congress has not tackled the issue of tax simplification. As a result, it takes longer for taxpayers to complete their returns and forces many to hire accountants and tax attorneys to do the work.
The Internal Revenue Service (IRS) provides estimates for the time it takes the average taxpayer to keep records, understand the law, prepare the forms and send the completed paperwork to the IRS. This year it is expected to take over 26 hours for an individual to complete the average tax return and for many people, especially small business owners, it will take even longer. This is an incredible waste of time and productivity.
The amount of money spent to comply with the tax code is also staggering. In 2000, taxpayers spent an estimated 3.2 billion hours trying to comply with the federal tax code and paid experts $19 billion for tax help. One national magazine recently noted that if you value the time of a taxpayer at $25 an hour, that means $99 billion was spent just to comply with the code. The IRS spends and additional $10 billion a year to administer the tax code.
I, along with many taxpayers here in Cincinnati, have argued that it is time to fix this broken system. Now, the President and other members of Congress are starting to agree.
President Bush has announced that he is committed to streamlining the tax code and the filing process. In January, the President created the bipartisan Advisory Panel on Federal Tax Reform headed by former Senators Connie Mack, a Republican from Florida, and John Breaux, a Democrat from Louisiana.
The panel has been instructed to look for ways to simplify the tax code while reducing the burden on taxpayers and encouraging continued economic growth. The executive order that created the advisory panel also stressed the importance of "homeownership and charity in American society." The group is to submit its recommendations on tax reform no later than July 31, 2005.
While I'm hopeful that this bipartisan panel's recommendations will persuade defenders of the current tax code to join the reform movement, there are already several proposals that Congress should consider. These includes a flatter, fairer tax code with one low rate for all taxpayers and a national sales tax (combined with the permanent elimination of the income tax.)
Although I am open to considering many different alternatives, any legislation must bring lower rates to all Americans and reduce the financial and time burdens that the current code places on taxpayers. We must also guard against attempts by supporters of bigger government to use tax reform as a way to raise taxes on the American people. With these thoughts in mind, I look forward to working on your behalf to reform the tax code this year.