Dear Mr. Adams:
Thank you for contacting me regarding efforts toward tax reform. I appreciate hearing from you and welcome the opportunity to respond.
As you may know, our current tax code is cumbersome and complex. This year the Taxpayer Advocate, the official who represents the needs of taxpayers to the Internal Revenue Service, reported to Congress: “The most serious problem facing taxpayers – and the IRS – is the complexity of the Internal Revenue Code.” Sixty percent of Americans filing tax returns use some type of preparer service to complete their forms, and another twenty-nine percent use some type of preparation software. This means nearly nine of ten Americans filing tax returns used some type of assistance to fill out their tax forms. This is not just a nuisance; it also has real costs. In 2007, the average taxpayer faced $258 in compliance costs to abide by the tax code.
Our complex tax code also contains numerous exemptions, deductions and credits, known collectively by the technical term “tax expenditures.” The President’s Bipartisan Deficit Commission found that $1.1 trillion dollars each year is spent on tax expenditures compared to total revenues of $2.2 trillion. A tax code full of exemptions, deductions and credits lets the government pick winners and losers instead of letting companies compete in the free market and encourage growth. It also leaves room for those who can afford tax attorneys and financial planners to pay less. Instead of filling the tax code with special interest loopholes, we should remove these exemptions and credits and lower tax rates for all to spur growth and create new jobs.
I will support plans that include a pathway to a simpler, fairer and more broadly based tax code. Plans should close corporate tax loopholes so companies have fewer opportunities to not pay taxes. Savings from closing loopholes should be used to lower overall tax rates so that the United States would no longer have the second highest corporate tax rates in the developed world. This would encourage growth and help companies and their investments come back to the United States. Similarly, we should also simplify the individual tax code, consolidating tax brackets and lowering overall rates, paid for by closing exemptions. Perhaps most importantly, plans for tax reform should come as a component of a larger deficit reduction package.
Thank you for taking the time to contact me on this issue. Please feel free to contact me at (312) 886-3506 or online at http://kirk.senate.gov if you have any questions or concerns before Congress or the federal government. It is an honor to serve you in the Senate.
Very truly yours,