It is that time again: Tax Day is Tuesday, April 17 this year.
For many, that means a weekend filled with frantically tracking down paperwork and filling out forms. The IRS estimates that, for them and those early birds who have already filed, it takes the American people 7 billion hours and $160 billion each year just to comply with the tax code!
It is no wonder why: the instructions just for filling out the standard 1040 run 189 pages this year. Seventy five years ago that was two.
The tax code itself is growing at a staggering rate. Over the past ten years, there have been 4,428 changes to the tax code. That is more than one per day!
At present, the tax code totals 3.8 million words – or four times the length of the complete works of William Shakespeare. If only those middle school students struggling to get through Hamlet knew what awaits them as adults!
Ironically the 17th is also Tax Freedom Day which marks the day an average American has finally earned enough to pay his taxes as calculated by the nonpartisan Tax Foundation. At four days later than last year, that means it takes 107 days just to earn enough to pay your federal, state, and local tax bills! Now you can start worrying about things like housing, food, and clothing.
If that wasn't bad enough, consider this: in the midst of the worst recession in our lifetime – and on April Fools’ Day no less – America gained the distinction of having the highest corporate tax rate in the world. If we want to attract investment and job growth, how does that make sense? It looks like the joke is on us.
If ever there was a time to reform the tax code, it is now.
Some are marking Tax Day by pushing for new tax provisions that are catchy, like the so-called “Buffet Rule.” This poll-tested, pundit approved tax might be good for the class warfare narrative on campaign trail but it is not a serious tax reform proposal. If implemented, it would not even produce enough revenue to cover a month’s worth of the deficit much less help with the nation’s economic woes.
According to the most recent IRS data, even if we taxed everyone who makes more than $1 million a year at 100% – taking every dime they earned – we would raise $726 billion, which is not even enough to pay for the more than $1 trillion deficit President Obama calls for in his latest budget proposal.
Instead of trying to pit Americans against one another or adding another provision to our already overly-complex tax code, we should unite behind scrapping it in its entirety. Let's make the tax code simpler, fairer, flatter, and more conducive to economic growth and job creation.
The House advances just this type of reform in the Path to Prosperity. In it, we reject the President’s call to raise taxes, consolidate the current six individual tax brackets into just two, reduce the corporate tax rate to a more competitive 25 percent, and shift to a territorial tax system that puts American companies and their workers on a level playing field with foreign competitors.
I also support two more fundamental reform proposals that would simplify our tax code.
The Fair Tax would eliminate the tax code and replace it with a revenue-neutral personal consumption tax, ridding the IRS from people’s lives and allowing them to take home 100% of what they earn. Instead of compiling paperwork and the government’s double-dipping, this one-time tax would be collected at the point of sale on all products except essential goods and services which would be exempt from tax.
The Flat Tax would also eliminate the tax code, opting for a single, fixed tax rate. Tax returns could be completed on a single page – or post card even – by multiplying your salary by a fixed percentage, subtracting a standard deduction, and being done with Uncle Sam. It would ensure everyone pays their fair share by getting rid of tax shelters and loopholes.
Whichever plan you back, we should all be able to agree that it is time to replace the complex maze of special interest loopholes – which amount to over $1 trillion per year – with a simpler tax code that works for all Americans.
Our tax code should encourage entrepreneurs of today and tomorrow to pursue the American dream. It should give them a level playing field to compete with the world. If we've learned anything in our history it's that, when America competes, America wins.
Do you support fundamental tax reform? Do you favor the Fair Tax over the Flat Tax? Weigh in by taking my online poll.