I want to welcome Courtney Mattison to the Taxpayers Protection Alliance (TPA) team. We are super excited to have her on board as TPA’s new Director of Operations. What is a Director of Operations? Well, it’s a little bit of everything, but most importantly she is an important part of the TPA brain trust. Courtney started on Tax Day (May 17) which is no easy task, but she has hit the ground running. The only office decoration she brought with her is a Calvin Coolidge bobblehead. According to the University of Virginia’s Miller Center, “Coolidge did have an agenda. His chief concern was economics, where he favored low taxes, reduced regulation of business, and a balanced budget.” Yep, Courtney is going to fit in just fine at TPA.
Tax Day – Simplifying the Tax Code
Even though we are accustomed to Tax Day being April 15, the past two years Tax Day has been delayed. This year’s Tax Day was May 17, this past Monday. More than three years after the passage of the Tax Cuts and Jobs Act, the vast majority of Americans continue to reap the economic benefits of tax reform. Estimates suggest 90 percent of taxpayers got a break on their taxes. Reduced business tax rates resulted in increased hiring, higher wages, lower prices, and businesses relocating back to the U.S. However, not all the news is good for the estimated 150 million taxpayers across the country. A recent report suggests preparation and filing costs remain stubbornly high despite the simplification of the tax code and ease and generosity of the standard deduction. And high debt and reckless tax hike proposals threaten to drown taxpayers in an avalanche of liabilities. Lawmakers should reject these failed policies and commit to the increased simplification of the tax code.
According to a recently released analysis by the American Action Forum (AAF), the tax code remains far too complicated for millions of taxpayers. While the number of hours spent filling out Internal Revenue Service (IRS) paperwork has decreased by roughly 25 percent since 2017, this has not corresponded to a decrease in compliance costs. In fact, compliance costs have actually increased since 2017, creeping up from $170 billion to more than $190 billion over the past four years. That total amounts to more than $1,200 per taxpayer, which households pay both directly and indirectly via higher prices and lower wages when the costs fall on businesses. And, if the Biden administration successfully pushes through just some of their many counterproductive policy proposals, taxpayers may be in for even more pain. President Joe Biden has proposed raising the capital gains tax (effectively adding a second “death tax”), hiking the top income tax rate to 39.6 percent from the current 37 percent, and raising the corporate tax rate from 21 percent to “25 to 28 percent.” The rhetoric behind these plans is all-too-familiar. The president and his congressional allies argue that these tax increases only impact the upper echelon of American society and benefit everyone else.
Siphoning money out of the economy means fewer real resources available for companies to grow their operations and invest in their workforces. This is to everyone's detriment regardless of income status. Hiking corporate taxes would be particularly harmful since these taxes are routinely passed along to consumers in the form of higher prices and workers in the form of fewer, lower-paid opportunities. A study by the Tax Foundation estimates that raising the corporate tax rate to 28 percent would destroy 187,000 jobs and axe wages by nearly 1 percent. This is hardly a recipe for post-pandemic prosperity and only serves to deepen the hole the U.S. is trying to dig itself out of. The Biden administration and Congress can make the tax system friendlier for families and entrepreneurs by holding off on tax hikes and simplifying the code. For example, making it easier to report employee benefits would make it easier to hire and retain qualified workers while reducing the cost of goods and services across the economy.
Next Tax Day, whether it be in April or May, can be far merrier than this Tax Day, but only if policymakers get on board with sweeping reforms.
Tax Day – Less is More for Taxpayers
After finishing their taxes, many Americans are left wondering if there is a better way to file taxes. The process often seems like a government-sponsored brainteaser to see if you can come up with the right number, and the government will punish you if you guess incorrectly. So, proposals have been put forth to have the IRS pre-determine a taxpayer’s liability and send them a bill. While this might seem a better solution, nothing could be further from the truth. Handing over filing duties to the government would amount to a reckless expansion of IRS discretion and agency snooping. Despite these consequences, a proposal popularized by Sen. Elizabeth Warren (D-Mass.) entitled the Tax Filing Simplification Act would put the IRS in the driver’s seat. As with most legislative short titles, the problems with the proposal are hidden by a misleading name. The IRS does not understand the minutiae of every taxpayer’s life. Leaving the decisions up to bureaucrats with less information at their disposal will simplify nothing. Also, putting the filing in the hands of the IRS puts an unfair burden on taxpayers should there be any discrepancies or disputes. Challenging the IRS on tax questions is already complicated enough, given the agency’s deep bureaucratic web. Imagine the increased complexity when the IRS becomes the default decision-maker in tax filing. The burden of proof shifts heavily to taxpayers.
The IRS’s budget is more than $11 billion. Under recent spending proposals, the agency stands to benefit from a 10 percent increase in the very near future. Adding the cost of turning the agency into a tax filer for every American could add billions of dollars to the IRS’s budget. All that hassle that hundreds of millions go through every year will now be concentrated in one agency. That is the exact opposite of simplification. This expansion of government size and power would no doubt be reflected in tax bills across the country – and then be completed by the agency itself. It’s a head-spinningly foolish idea. This would not be the first time such an idea has been tried. In 1995, the IRS created CyberFile. The aim was for the IRS to develop a system that would prepopulate tax information and do so in a paperless way. Unsurprisingly, CyberFile was an unmitigated disaster. The Government Accountability Office (GAO) noted a number of security issues with CyberFile. There were many incomplete and inexact installations to the final program. It was a costly effort that never got off of the ground. The sad reality is that all this work and money got poured into trying to develop a government version of a program that had already been successfully developed in the private sector. The government’s effort to tighten its grip over the tax filing process failed. The IRS’s technological woes have not improved over the last 25 years. A recent report from the Treasury Inspector General for Tax Administration found that well over 200 IT systems currently used by the IRS are antiquated legacy systems. The IRS continues to develop software to meet its needs, but produces systems that don’t have the ability to interface with one another, making any effort to create a seamless process a fruitless one. This is exactly what Americans cannot afford when it comes to their hard-earned tax money.
This tax season, millions of Americans have inevitably been rolling their eyes and exhaling deep, frustrated sighs as they filled out their returns. But the solution is not giving the agency that produced the existing mess more control. Rather, policymakers should strive to actually simplify the tax code and cut down on bureaucratic waste at the IRS. Having the IRS fill out taxes for the American people may seem like a good idea on the surface, but such a process would only succeed in adding another layer of bureaucracy on top of an already complicated system. People want less of the IRS in their lives, not more.
BLOGS:
Media:
May 16, 2021: The
NH Journal ran TPA’s op-ed, “This Tax Day, Lower Rates and Simplify the Code.”
May 16, 2021:
Inside Sources ran TPA’s op-ed, “Proper Funding, Not Prohibitions, Right Way to Address Youth Vaping.”
May 17, 2021: WBFF Fox45 (Baltimore, Md.) interviewed me about a proposal to have the IRS prepare taxes.
May 18, 2021:
The Jacksonville Courier (Jacksonville, Fla.) ran TPA’s op-ed, “Want fewer teen smokers? Stop all the bans.”
May 18, 2021: WBFF Fox45 (Baltimore, Md.) quoted TPA in their story, “Tighter Travel Policies Proposed for Elected Officials.”
May 18, 2021: TPA was mentioned in an op-ed in Inside Sources titled, “Biden's $100 Billion push for broadband equity Is no panacea,”
May 18, 2021: I appeared on KWTO 93.3 FM (Springfield, Mo.) to talk about Tax Day and the proposed tax increases by the Biden administration.
May 18, 2021:
Catalyst ran TPA’s op-ed, “America’s COVID-19 Vaccine Success Is Just the Start.”
May 19, 2021: TPA was quoted on KGMI 790 AM (Seattle, Wash.) about the menthol cigarette ban.
May 19, 2021: TPA was quoted on KXL 101 FM (Portland, Maine) about the menthol cigarette ban.
May 19, 2021: TPA was quoted on Supertalk radio (Jackson, Miss.) about the menthol cigarette ban.
May 19, 2021: TPA was quoted on KTSA 550 AM (San Antonio, Texas) about the menthol cigarette ban.
May 20, 2021: TPA was mentioned in an op-ed in
The Roanoke Times (Roanoke, Va.) titled, “Ossowski: Biden's $100 Billion push for broadband equity Is no panacea,”
May 20, 2021: WBFF Fox45 (Baltimore, Md.) interviewed me about the upcoming fiscal year 2022 budget in Baltimore.
May 20, 2021: Townhall.com ran TPA’s op-ed, “Price Controls vs. Innovation.”
May 20, 2021: I appeared on WBOB 600 AM (Jacksonville, Fla.) to talk about electric vehicles.
May 20, 2021: I appeared on WORD 106.3 FM (Greenville, SC) to talk about the carbon tax.
Have a great weekend!
Best,
David Williams
President
Taxpayers Protection Alliance
1401 K Street, NW
Suite 502
Washington, D.C. xxxxxx
www.protectingtaxpayers.org
