Join our Online Group!Even Congress Cannot Understand Tax System..
January 20, 2009 by Charlie
Filed under FairTax News
Nina Olsen, National Taypayer Advocate (NTA) at IRS, is telling congress that the current Tax System is so complex that they cannot read their own codes, in her “Annual Report To Congress“.
If Obama and Congress still aren’t convinced after reading Olson’s report, they should consider the sorry case of one of their own. Even Rep. Charlie Rangel, chairman of the nation’s top tax-writing committee, “Can’t understand the basics of the tax code.”
President-elect Obama reportedly told congressional leaders Monday during a private meeting about an economic stimulus package. “If it’s a good idea, we will consider it.” If there was a time to have our voice on FairTax, it is now. We need to speak up or forever hold our peace! Read this article from US News & World Report:
The Case for Overhauling a U.S. Tax System Even Congress Doesn’t Understand
January 08, 2009 02:00 PM ET
By Sam Dealey, Thomas Jefferson Street blog“The monopoly on good ideas does not belong to a single party,” President-elect Obama reportedly told congressional leaders Monday during a private meeting about an economic stimulus package. “If it’s a good idea, we will consider it.”
When it comes to taxpayer money—raising, spending, and occasionally deigning to return it—neither party in Congress has demonstrated particularly good ideas lately. The majority of lawmakers seem to believe that stimulating the economy means expanding recurring welfare programs, plowing money into pet projects of only limited or short-term use, and bestowing inadequate, selective tax cuts.
But if Obama is looking for ideas, he might consult with Nina Olson, the national taxpayer advocate at the IRS. In her annual report to Congress, released yesterday, Olson makes a persuasive case for overhauling the U.S. tax system.
“The largest source of compliance burdens for taxpayers, and the IRS, is the overwhelming complexity of the tax code,” Olson writes. “The only meaningful way to reduce these burdens is to simplify the tax code enormously.”
It’s common sense and worth a read, but a few figures stand out:
* Americans spend 7.6 billion hours annually trying to figure out their federal taxes. Working eight-hour days, five days a week, 50 weeks a year, that’s the equivalent of 3.8 million full-time workers.
* At the average hourly wage of $27.54, that tax-preparation time amounts to $193 billion, or 14 percent of aggregate income tax receipts.
* A staggering 60 percent of individual taxpayers are so bewildered by the tax code that they hire outside preparers. An additional 22 percent buy computer software.The bottom line: Paring the tax code’s 3.7 million words to something comprehensible would effectively return money to the taxpayer at no “cost” to the government. Individual taxpayers could do something else with their time, the small-business owner could concentrate on creating income, and the IRS (and, consequently, the taxpayer again) could spend less money on compliance and enforcement. Heck, taken all together, tax receipts from a simplified tax system might actually rise.
But if Obama and Congress still aren’t convinced after reading Olson’s report, they should consider the sorry case of one of their own: Even Rep. Charlie Rangel, chairman of the nation’s top tax-writing committee, can’t understand the basics of the tax code.
Here are 3 of 11 comments posted from this article:
Suggestions“Simplicity” starts at making capital gains exactly the same as ordinary income, with no special rules for cap gains at all.
“Simplicity” could continue at elimination of S-Corp. If you’re a corporation, you’re taxed as a corporation. No exceptions.
“Simplicity” is also the elimination of every estate-tax-avoiding trust scheme.
Now, whaddaya bet Republicans would hate all three of these ideas? They don’t want simplification at all. They want EXCEPTIONS and they always have.
Jan 08, 2009 15:04:46 PM.Keep Dreaming
Ever read the tax code? I have. The reason it’s so big is that it’s riddled with special tax exemptions for special interest groups or big campaign donors. There are provisions in the code that only apply to one person!
Thus, tax simplification is a non-starter for Congress. It will drastically reduce their ability to hand out favors in exchange for kick-backs (uh, sorry, campaign contributions. My bad).
Fifo of NY Jan 08, 2009 16:01:55 PMFair Tax for all America!
I wish someone could tell our elected officials about the fair tax. It would benefit all Americans and businesses. How about it Mr. Dealey? Do an expose’ on it and get the word out, good and bad.
Our new President is in place, a New Congress is in place. Are we (FairTax) in place to tell them what we want? Tell them, start getting our elected officials to go to work for us, as we did hire them to represent us. Now is the time to call, write and email them and Pass the FairTax Bill!
Charlie Prochaska
Volunteer Community Coordinator
FairTaSOWEGA
Sure Ms. Olson has talked about the IRS’s shortcomings, ruffled a few feathers, and wrote some tough reports. Unfortunately, Ms. Olson has not been able to get very much accomplished in her seven years on the job other then create a high employee turnover rate. She tried to simplify the tax code by creating a standard definition of a child. When all was said and done, she only made matters worse. So much worse, the law had to be amended.
Ms. Olson also destroyed the very program in the IRS that was set up to assist taxpayers. Before Ms. Olson, if you needed help with a tax problem that was not dealt with satisfactorily through normal channels the IRS would transfer your case over to a group that had the experience in your particular issue and the authority to fix your problem on the spot. Ms. Olson has forsaken this logic. Now if you need help and your case is transferred over to her program it will most likely be assigned to someone that is not experienced or even properly trained to assist you. Moreover, even if the employee understands your situation they will not be able to fix it. They will have to turn around and request the IRS to fix it. Not only is this a poor way to assist taxpayers it also costs taxpayers more money.
The Taxpayer Advocate’s office has an important role of advocating for all taxpayers. While Ms. Olson does an adequate job of this, she does not advocate very well for the individual taxpayer who comes into her office for assistance. For that reason, her employees that work with taxpayers should be reassigned back to the IRS where they will be better trained and better able to quickly assist taxpayers in their moment of need.