It was two weeks ago that congressional GOP leaders unveiled their “Unified Framework for Fixing Our Broken Tax System,” and its opponents (read: every special interest group that employs a tax lobbyist) have launched their campaigns to protect their loopholes. Some Capitol Hill Republicans are already getting nervous, and it’s clear the only way a significant tax reform will pass is if a powerful grassroots coalition can arise to provide counter-pressures against the special interest lobbyists.
Enter the Tax Reform Coalition, a joint project of Tea Party Patriots Citizens Fund and FreedomWorks.
Reforming our nation’s 75,000-page tax code will not be easy. In fact, it’s going to be rather difficult - that’s why it hasn’t been done since Tom Cruise took flight as a naval aviator in “Top Gun” and Michael J. Fox was better known as Alex P. Keaton on “Family Ties.”
What’s really remarkable about the current tax code is just how much more complicated it is than it was when it was last reformed 31 years ago. In 1984, right before it was last reformed, the code was “just” 26,300 pages long. That’s about one-third its current size. That’s right - the U.S. tax code has almost tripled in size and grown by almost 50,000 pages since the last time it was reformed.
And what are those additions and complications? They’re mostly all manner of deductions - also known as “loopholes.”
Each of them has a (usually small but well-connected) constituency, and each of them is now part of the tax code because at some point in time, a majority in both houses of Congress was persuaded that voting them into the tax code made more sense than not voting them into the tax code.
“Over the decades,” wrote the Tax Foundation in its chart book, “Putting a Face on America’s Tax Returns,” “lawmakers have increasingly asked the tax code to direct all manner of social and economic objectives, such as encouraging people to buy hybrid vehicles, turn corn into gasoline, purchase health insurance, buy a home, replace that home’s windows, adopt children, put them in daycare, purchase school supplies, go to college, invest in historic buildings, spend more on research, and the list goes on.”
Now, each of those may be a desirable activity. But using the tax code to encourage people to engage in each of those activities is problematic, because for every dollar deducted from someone’s taxes because he or she engages in that desirable behavior, an offsetting dollar must be raised elsewhere - and that almost always comes in the form of a higher tax rate applied to a broad class of taxpayers.
And because that higher tax rate is applied to a broader class of people than the individual deductions benefit, it typically costs each individual taxpayer only a marginal increase. Therefore it’s less noticeable, and more easily hidden.
But when you do that for thousands of loopholes, the end result is an absolute mess - a tax code for which the Internal Revenue Service (IRS) now has more than 2,000 different forms, and which Americans now spend 6 billion hours and $400 billion just to comply with.
Tea Party Patriots Citizens Fund recently sent out emails to our millions of supporters, asking for their feedback on the current code. How does it affect them? How does it affect their business, or their job? What would they do with tax reform that lowered their taxes?
Not surprisingly, we found a lot of criticism of the current code and its complexity.
Small businessman Tom H. from Decorah, Iowa, responded that he wanted the tax code reformed “To make it simpler, so I can do them myself,” and then added, “Do not need just lower taxes, need the tax code simplified.”
Another small businessman, David J. of Las Vegas, Nevada, wrote that the current tax code “Drains off too much profit. Cannot reinvest and grow,” and said of tax reform, “Lower taxes would let me have money to reinvest and grow my business.”
And health care provider Allen U. of Sioux Falls, South Dakota, responded, “Taxes cost more than food, clothing and shelter. I can’t afford to hire more employees, or give raises. I can’t afford to expand my business and buy new equipment … It serves special interests and confiscates the production and savings of hard working Americans.” With tax reform that lowers his taxes, he “would give raises to current employees and double my employees.”
The time has come for fundamental reform of the tax code. We can grow our economy and create better and better-paying jobs. But it won’t come easy - we’ll have to fight hard against the special interests. Join us at www.taxreformcoalition.com.