Friday, November 18, 2011


TAX-NEWS tells us that “IRS Chief Looks For Tax Simplicity” (highlight is mine) -

In his remarks to the Harvey Kennedy School in Cambridge, Massachusetts, the United States Inland Revenue Service (IRS) Commissioner Douglas H. Shulman said that one of the greatest impediments to effective tax policy implementation is complexity, and that, above all, most taxpayers want tax code simplicity.”

Here is some of what Commissioner Shulman said –

Making the tax code less complex is the single most important thing that could be done to improve taxpayer service and boost compliance.”

Each tax benefit has its own series of requirements, some of which overlap, but many of which do not. Many of the tax benefits are income limited or phased out at different income levels. Certain tax benefits must be coordinated with each other. Then start to layer on other complexities, including standard vs. itemized deductions, medical expenses, education expenses, charitable expenses, local taxes, and for many taxpayers, the Alternative Minimum Tax... the list goes on and on.”

Complexity can lead people to not take advantage of tax benefits, largely credits and deductions, that Congress intended them to have, either because they don’t understand them or are afraid they may be ineligible. And in my experience, when laws or regulations are complex, it creates opportunities for those who want to game the system.”

Congress should “try to resist the temptation to enact short-term provisions that may expire but are then extended. This has an enormous unsettling effect on both clarity and stability. Last year, the JCT identified more than 130 tax provisions that were set to expire at the end of 2010, with another 65 due to sunset at the end of 2011.”

Complexity grows incrementally with every legislative session. The 15,000 plus changes to the tax code since 1986 are anything but elegant, anything but simple, and anything but clear to the average taxpayer. A simpler system could better further policy goals by having a more involved and engaged taxpayer base that would take advantage of incentives to which they are entitled and thereby improve their economic position.”

The article also points out –

While the Joint Committee on Taxation (JCT) found that between 1980 and 2010, the number of tax expenditures in the code grew from slightly less than 100 to almost 250, and that the IRS has counted that there have been 3,000 legislative changes to the tax code since 2000, he provided some ideas on how to deal with some of the difficult problems that the IRS faces in interacting with taxpayers.

I hope the idiots in Congress were listening.


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