US Tax Code Too Complex

January 10, 2013 Taxation in USA

Doing TaxesWASHINGTON D.C. – The US needs to make tax simplification a number one priority and needs to wade through its myriad of tax breaks to remove those which are inefficient and only serve to reduce the government’s revenues.

On January 9th the US National Taxpayer Advocate Nina Olson released a scathing new report highlighting the shortcomings of the country’s tax system and in the services provided by the Internal Revenue Service, saying that the tax system is too complex, and the IRS does not receive the funding necessary to help taxpayers meet their obligations.

According to the National Taxpayer Advocate, the complexity of the national tax code is the most serious problem that is facing taxpayers today, as its complexity obscures comprehension, leaving many taxpayers unaware how their taxes are computed and what rate of tax they pay “.

The entire tax code has now reached a length of approximately 4 million words, and has faced nearly 5 000 changes, amendments and updates since 2001.

The complexity of meeting all necessary tax obligations now means that US taxpayers spend approximately 6.1 million hours a year simply complying with their tax requirements.

Nina Olsen recommends that in order to address the issue of complexity the tax code needs to be fundamentally reformed, and the government needs to reconsider all of the tax allowances, credits and deductions, as they currently cost USD 1.09 trillion per year in lost revenues.

The Advocate also said that the government needs to reconsider its budget cuts to the IRS, as any loss of funding will directly lead to a reduction in the Service’s effectiveness and ability to collect taxes.

Photo by MoneyBlogNewz

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