The Urgent Need for Tax Reform

Filing taxes is a costly, stressful process no matter who you are. Congressman Peter Roskam explains the need for a flatter, simpler and fairer tax code.

Though debate rages on over taxes and who pays how much, we can all agree that filing them each year is a costly, stressful process.  It’s messy, time-consuming, and even when it’s over there is still the worry we’ve missed something and may end up having to pay the government even more. Of course, when dealing with a tax code that’s over five thousand pages long, the concern and confusion is understandable.

Each year, Americans spend more than six billion hours just to comply with our burdensome tax code. That means in 2008, Americans spent $163 billion in the cost of their own time poring over the code, not to mention what they also spent in collections to the IRS and other government fees. The current tax code is so complex, nearly ninety percent of Americans either purchased a computer program to help do their taxes, or hired a tax professional.   

Did you know that the U.S has more professional tax preparers than police and firefighters combined?  At 1.2 million, that’s almost as many tax professionals as active duty military personnel—it literally takes an army to prepare our nation’s taxes.  But with a tax code that contains a myriad of loopholes and credits, you almost have professional help to get through them.

On top of the complexity we all face, American companies are paying the highest tax in the industrialized world.  Our corporate tax rate is 35%, which on average is 14 percentage points higher than our international competitors.  While countries like Japan are lowering their rates to attract business abroad, American companies spend billions of dollars each year complying with a tax code that picks winners and losers through loopholes and deductions.

Each year, businesses small, medium and large spend a lot of money navigating our tax code—and that is money not spent creating jobs, fostering innovation, or growing the economy. This is the 42nd straight month of unemployment above eight percent—we should be doing everything we can to get this nation back to work.  Reforming our outdated, broken tax code is at the top of the list for pro-growth policies.

A tax code that is simpler and well thought out can ensure the United States is more competitive in the global marketplace.  Our current tax code dates back to 1986-- when Top Gun was the number one movie and Larry Bird was the NBA MVP.  Think about it: our convoluted tax system doesn’t match our 21st Century economy, and it’s holding us back.

For almost two years, the House of Representatives has been studying tax reform to prepare for a fundamental overhaul for corporations and businesses.  Over the summer, we voted on a plan to ensure this gets done in 2013, while laying out the principles for a simpler, flatter, fairer tax code.  The status quo of the tax code is clearly indefensible.  That is why we are working to reform the tax code and work to get our economy growing again.

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Matt Lykken October 15, 2012 at 03:27 PM
The route by which corporations bring their effective tax rates down to acceptable levels under the current system is highly troublesome. our system, designed when the U.S. was the only economy that counted, actively and heavily penalizes basing operations in the U.S. or investing money here. To bring the nominal tax rate down to 25%, you would need to eliminate all of the incentives that help to offset this effect for domestic manufacturing, and then some. Similarly, the Obama proposals, contrary to what the administration claims, would just aggravate this problem. We need something like the Shared Economic Growth proposal to make America the best place to invest in high-tech, high-wage operations, without adding to the deficit or to the overconcentration of wealth that is weakening our middle class.
Matt Lykken October 15, 2012 at 03:35 PM
I agree that we urgently need tax reform, but I must note that the number of tax preparers is not the best argument. I have paid taxes in other countries where the government will pre-prepare your return for you, which is easily done - and would be easily done here - for most wage earners. The preparers in this country, like Jackson Hewitt, concentrate in the same neighborhoods as payday lenders, preying on people too ignorant to realize that their tax returns are simple. (Indeed, part of the reason they want to prepare the returns is because it facilitates the profitable business of giving refund-advance loans at startling interest rates). When it has been proposed in this country that the IRS should pre-prepare wage earner returns, the proposals have been firmly rejected due to heavy lobbying by the paid preparers. Let's get rid of that little bit of corruption, do what other countries do to relieve the bulk of Americans from their April pain, and then turn to the business of tax reform from the point of view of efficiency and fairness.
John Collet October 15, 2012 at 03:58 PM
The present tax system is obviously a disaster and not defensable. Few if any publically defend the prersent 77,000 page mess. When the FairTax is thoughtfully compared with any other replacement plan it is obviously superior. The basic logic of taxing consumption rather than income is overwhelming. This is reinforced with the fairness of only taxing consumption above each person's poverty level. If you need more information go to fairtax.org Your only question then will be why is it not already passed? John Collet
John Collet October 15, 2012 at 03:59 PM
I support the Fairtax
Al Ose October 15, 2012 at 04:03 PM
If there are people who support our current tax system please point out the "good" things about it. Do you think having your income taken from you without your say is a good thing? Do you think a system that adds over 50% in compliance costs is a good thing? Lobbyists, criminals, and illegal aliens love this tax system. What does that tell you.
Sara C October 15, 2012 at 04:37 PM
Mr. Roskam has the ability to change history by supporting The Fair Tax to move out of committee. I know that I speak for many citizens that quietly support this way of taxation. Please Mr. Roskam, do the right thing and let this move to the full house. :D
Kurt Schmal October 15, 2012 at 05:16 PM
It is depressing!
Kevin C. October 15, 2012 at 05:38 PM
I can think of only one reason why the FairTax has not been passed. Politicians don't want to give up their power! We are sick of the failures of congress! The working people will eventually revolt Mr. Congressman. Will you go down in history as a hero who had the balls to help end our slavery or will you be remembered as a coward who's political fears trumped his patriotic duty? Change is coming Mr. Congressman. I have faith that you will do your part. Support H.R.25.
Tom Leonard October 15, 2012 at 05:56 PM
Of all the taxes plans and proposals that I have seen, only the Fair Tax makes economic sense because the government would receive the revenue it needs and at the same time allows all Americans to enjoy the fruits of our labor. I and most of my fellow Americans know that we are the best stewards of our money, not the government. Incentives matter and the idea that I control my income and expenditures put the decision in my hands, not a bureaucrat. If I could control my money doesn't it make sense that I would spend it on goods and services that benefit my household and then expand out and help business profit. Business could expand their workforce, provide benefits to their workers. The Fair Tax just makes economic sense.
Gary "Cousin" O'Malley October 15, 2012 at 07:37 PM
When the law is used to take from one group without permission the government deems less worthy and gives it to another group it deems more worthy, legal theft is taking place. Two groups are formed, David, who wants more theft, and Matt who wants less. This constant fight between these two factions has created our current 78,000 pages of cronie corruption. The FairTax eliminates not only the income tax but also FICA taxes which further benefits the poor and business owners, by releasing both from these taxes. Making America a safe haven for income will spur much more domestic investment in domestic jobs. Manufacturing can return without the 400 billion dollar a year drain on businesses in tax compliance costs alone. High tide raises all boats. Not Obama, not Romney not you can change that FACT. More prosperity for everyone is the way to bring the American Exceptionalism back. "Leveling the playing field" IS NOT instituting affirmative action by government. This makes the field uneven, not even.
Gary "Cousin" O'Malley October 15, 2012 at 07:49 PM
What are the "effective" tax rates of those countries that have lower initial rates. Do that not also have write offs and exemptions in an effort to ward off more legal theft? You obviously don't undertand economics. Income - overhead (government taxes are overhead) = prosperity. This is math. It can't be changed. If you replace a 45% rate of income taxation (income taxes, FICA (based on income) and hidden taxes (those taxes paid by manufacturer, distributor and retailer rolled into retail prices) and replace it with ONE TRANSPARENT TAX it is an equitable uniform tax code that doesn't choose winners and losers by the whim of EITHER PARTY. Finally the average citizen will be able to control how much they each pay in taxes, every time they purchase new retail. CHOICE, free will is returned to our tax code. Those that aren't frightened of more freedom embrace this legislation. Those that are scared don't. It's as simple as that. :-)
Gary "Cousin" O'Malley October 15, 2012 at 07:54 PM
David, tax reform means you pay less because the base will be broadened if the reform is done right. If it is done wrong, you might. This is why it is important that this tax reform dramatically broaden the base. The broadest base is a tax on consumption. Consumption taxes are said to be "regressive" . But this is just leftest jargon introduced into economics. ALL TAXES are regressive and the most regressive of all are progressive taxes on income. When we wish to have more of any action we reward it. When we wish less, we give those actions consequences. Today we punish success and reward failure. And as the left loves to say, "That's unsustainable". :-)
Robert M October 15, 2012 at 08:01 PM
I have been a proponent and advocate of the Fair Tax ever since I found out about it. I don't have money to throw at it and it's mainly BECAUSE OF the UN-fair taxes, including the taxes on my social security which invarianly essentially halves it. Why don't these mooks in DC see that there will be more money in the coffers if the Fair Tax is implemented. Can't see the forest for the trees? Or just won't be able to steal and hide our money like they've been doing? Makes me sick.
Mic Szeman October 15, 2012 at 08:43 PM
Right, the current system of > 10,000 pages of rules, regulations and loopholes for special interests, lobbyists, and other D.C. insiders is far superior. Let's just keep things status quo.
kyle scott October 15, 2012 at 10:42 PM
It's not that politicians don't want to give up their power, but that they don't want to give up their loopholes. Obviously, the guys riding around in $100,000 cars will be paying more with the fair tax. We have got to replace these bums. This is obviously the most fair and equitable tax and provides very little opportunity for fraud.
T.C. October 15, 2012 at 10:53 PM
Read the BILL H.R. 25 it explains all. !!!
Ray McKee October 15, 2012 at 10:58 PM
Congress Roskam: The ball is in your court. Let the full House vote on HR-25.
Lisa Chambers October 16, 2012 at 01:30 PM
I hope all of you are contacting your Congressman and telling your friends to contact theirs because, since the House passed HR 6169, tax reform will happen by April 30, 2013 -- or when the Republicans are in charge again.
Adrian B Early October 16, 2012 at 01:36 PM
Taxing consumption (Fair Tax) is better than taxing production (Labor and capital; Income, Payroll, and Business Taxes) FOR AMERICAN COMPETITIVENESS. Meaning jobs. Right now we do not tax imported goods (let other nations do that). We do tax ALL American - produced goods. Under the Fair Tax we tax only goods (and services) consumed here (including foreign made). Exports would not be taxed at all (other than due to consumer purchases by workers and holders of capital). The Fair Tax is the ultimate tax shelter. And that is a GOOD thing, not bad. The government can still collect lots of taxes due to the prosperity and consumer spending that would result. -ABE Adrian B Early, PhD, MBA
McCloud October 16, 2012 at 01:58 PM
The Dow was down at the end of GW Bush's term because the Housing Crisis started. The DOW is up now from Fed money pumping, making foreign investment attractive due to the devalued dollar. Thats why gas prices are so high. Maybe you should understand the stories behind the numbers before you conclude on them. Tossing around words like worst kind of coward is not an effective use of the hyperbole either.
Daar Fisher October 16, 2012 at 03:49 PM
Why is support for the FairTax growing? ► Synopsis of FairTax Research Conclusions http://www.scribd.com/doc/98067394/Synopsis-of-FairTax-Research-Conclusions
Ray Gebauer October 17, 2012 at 05:33 AM
Please Mr. Roskam, do the right thing and let this move to the full house so that they have a fair chance to vote on this. Do not DEPRIVE America of this opportunity to have a fair tax system. Let CONGRESS decide--don't YOU make the "decision" passively by preventing this to move to the full house for their vote. PLEASE!
Jim ConroyFT October 17, 2012 at 02:14 PM
we lose a lot of jobs in this country because the taxes collected are added to the cost of the goods sold. Want jobs? Pass the FairTax!
Marty Sturmer October 20, 2012 at 11:55 AM
I just woke up in the middle of the night thinking about suiside. The IRS has brought me this dispair. It is the reason I am failing. Then I think of my family, and how the Fair Tax can solve my problems. Please help me and our country by returning economic freedom to the people ASAP. It's my only hope
Glenn Gray October 28, 2012 at 03:11 PM
I'm 78 yrs old and I have witnessed effects of the 16th amendment in dividing us and bring us to this final cliff of decision. Each and every American citizen has the chance to make the decisions to either just keep kicking the can for some type of 3rd world order country or institute a path of repealing the 16th . HR25 / S13 The Fair Tax Act is the only path, we know of being offered the people to maintain America as we know her with the bonus of a nearly instant robust economy.
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