As tax day approaches, many Americans are struggling to complete their tax returns as they navigate the confusing and unfair federal tax code. The last major overhaul of the code was the Tax Reform Act of 1986, which significantly reduced rates and simplified the code by closing loopholes. However, over time, many of these reforms have been undone, leading to a tax code that is now longer than ever before and full of loopholes.
The complexity of the tax code means that U.S. taxpayers spend more time and money on their taxes than almost any other country in the world. The average taxpayer spends 13 hours completing their tax return, and the majority use a tax preparer or software to assist them. The cost of the tax breaks and complexity in the code have led to higher deficits and record levels of debt, as well as a $625 billion tax gap due to errors and noncompliance.
Despite the clear need for tax reform, both political parties have failed to address the issue, with Republicans advocating for tax cuts for the wealthy and Democrats pushing for new tax breaks for social causes. The idea of having the IRS complete taxes for individuals has been suggested but is seen as a short-term solution that will not address the underlying issues. Real reform is needed to simplify the code, reduce rates, and increase federal revenues.
Members of Congress have the opportunity to build on past reform efforts, such as the Tax Reform Act of 1986 and the bipartisan Fiscal Commission of 2011, to create a plan for comprehensive tax reform. While the process will be challenging, the benefits of enacting fundamental reform are clear, as it would be better for the economy and demonstrate that government can still act in the best interests of the people.
Tax reform is essential to ensure a fair and efficient tax system that benefits all Americans. While the current political climate may make it difficult to achieve reform, it is necessary for the government to rise to the occasion and address this critical issue. By working together to create a plan for comprehensive tax reform, Members of Congress can demonstrate their commitment to improving the tax system and promoting economic growth for all.
