Are you among the masses of U.S. citizens fed up with the federal tax code? If so, keep in mind that while you are certainly not alone in your frustration, you may finally get the opportunity to help do something about it. It turns out federal personnel management changes are not the only types of reforms being sought by the Bush administration. Recently the administration announced its intent to implement tax code reforms and is seeking public comments to help shape a new system.
On Jan. 7, 2005, President Bush announced the establishment of a bipartisan panel to advise on options to reform the tax code to make it simpler, fairer, and more pro-growth to benefit all Americans.
The advisory panel will submit to the secretary of the Treasury a report containing revenue neutral policy options for reforming the federal internal revenue code no later than July 31, 2005. These options will be designed to accomplish the following:
– Simplify federal tax laws to reduce the costs and administrative burdens of compliance with such laws;
– Share the burdens and benefits of the federal tax structure in an appropriately progressive manner while recognizing the importance of homeownership and charity in American society; and
– Promote long-run economic growth and job creation, and better encourage work effort, saving, and investment, so as to strengthen the competitiveness of the U.S. in the global marketplace.
The panel held its first meeting February 16. Sen. Connie Mack, chairman, stated that the panel is seeking public comments on the following issues:
– Headaches, unnecessary complexity and burdens that taxpayers – both individuals and businesses, face because of the existing system;
– Aspects of the tax system that are unfair;
– Specific examples of how the tax code distorts important business or personal decisions, and;
– Goals that the panel should try to achieve as it evaluates the existing tax system and recommends options for reform.
This could take awhile. Based on just those four issues it seems obvious that the reforms could be massive in scope. Most people have heard examples of tax code problems that, due to the excessive rigidness or complexity, have become legendary and great fodder for humorists such as Dave Barry and others. A look at a tax code fact provides the catalyst for some of those issues, such as:
– The Internal Revenue Code contains more than a million words.
– The number of pages in the Internal Revenue Code and regulations has more than
doubled over the past 20 years.
– In 1940, it took only two pages of instructions to fill out the Form 1040; today, the 1040 EZ or “short form” is accompanied by 36 pages of instructions.
– Today’s “short” income tax form takes more than 11 hours to prepare – about the same as the “long form” did a decade ago.
– It takes 12 pages of instructions to calculate the Earned Income Tax Credit – a basic element of income-support for the working poor.
– By 2010, more than one in five taxpayers will be forced to calculate their income taxes twice – once for the regular income tax and once for the Alternative Minimum Tax – and then pay the greater amount. The number of affected people will continue to grow over time.
The panel will hold public meetings over the next few months and seek input from individuals, businesses, and associations and organizations. It will also seek input from Members of Congress. The next meeting will take place on March 3, 2005 in Washington D.C.
Comments submitted in connection with this first request must be received by the Panel no later than 5 p.m. on March 18, 2005. All comments submitted will be made available to the public.
Follow Ralph on Twitter: @RalphSmith47