Simplifying the Tax Code will Ease Frustration and Help Improve the Economy

Simplifying the Tax Code will Ease Frustration and Help Improve the Economy
By Tom Cole
July 26, 2004

The enormously complex U.S. Tax Code is more than a burden to working families. It is a drain on our economy in terms of efficiency and productivity. Simplifying the Tax Code will lead to a less intrusive government, better businesses and stronger more independent families.

American taxpayers spend over three billion hours each year filling out tax forms, keeping records and complying with a confusing U.S. Tax Code. These burdensome regulations are not only frustrating they are expensive. According to the Ways and Means Committee, the cost to the U.S. economy of complying with the Tax Code is a staggering $85 billion annually. Not only do I think Congress should be working to lower taxes on American families, but we should also be working to simplify the tax code for all taxpayers. Last week the House passed two pieces of legislation that help improve the economy by relieving families and small businesses of time-consuming tax compliance regulations.

The Tax Simplification for Americans Act (H.R. 4841) recognizes that taxes are difficult enough to pay without the headache of forms, filing and frustration. This legislation, which passed last week by the House, will increase access to the time-saving 1040A and 1040EZ forms. Under H.R. 4841 taxpayers with up to $100,000 in taxable income (including taxable interest) will be able to use the EZ Form. Currently, the IRS does not permit taxpayers with more than $50,000 in taxable income, or more than $1,500 in taxable interest, to use the EZ. If this legislation is signed into law, approximately 1.1 million more taxpaying Americans would gain access to these simpler, convenient tax forms. The Tax Simplification for Americans Act would also terminate the IRS's confusing use of inconsistent definitions regarding a taxpayer's age, clarify the "Head of Household" language on forms to reduce errors in filing status and eliminate a number of outdated and unnecessary provisions in the Tax Code.

The Tax Simplification for America's Job Creators Act (H.R. 4840), also passed by the House last week, will help small businesses - the nation's number-one job creator -purchase equipment and hire more workers. This legislation will extend tax relief enacted in 2003 by two years, preventing a tax increase on small businesses in 2005. The Tax Simplification for America's Jobs Creators Act will enable many small companies to continue using the less complex cash method of accounting. H.R. 4840 also provides substantial simplification for small business by removing the complex and expensive recordkeeping associated with tracking the depreciation of each capital purchase.

The tax code's complexity is an obstacle to job creation and economic recovery. It is disgraceful that so many Americans struggle to make sense of a tax code that even tax experts cannot fully grasp. I will continue to support tax legislation that lowers marginal tax rates, reduces the tax code's complexity, and provides incentives that encourage stronger economic growth.