Q&A: Tax Reform Survey with U.S. Senator Chuck GrassleyWritten by Theresa Rose on February 27, 2015
Q: Why is tax season so vexing for so many taxpayers?
A: No doubt many Iowans are in the trenches right now as tax season gets into full swing. Gathering tax forms, receipts and documentation for income, expenses, charitable contributions, itemized deductions and the like is a painstaking process for many taxpayers. New mandates enacted by the Affordable Care Act add even more complications to an already time-consuming annual ritual that arguably causes blood pressures to rise in households across America. More than half of U.S. taxpayers outsource the headache and hire a professional tax preparer. A survey by the National Society of Accountants reports the national average fee for preparing 2014 tax returns will cost $273. Iowans will pay on average $198, the average fee in the Upper Midwest, according to the survey. Some taxpayers file independently, buying off-the-shelf tax preparation software to help them navigate the increasingly complex tax rules and regulations. Let’s also factor in that the IRS forewarned taxpayers to expect poor customer service. More than 100 million taxpayers are expected to call into the IRS, and yet the agency estimates less than half will get through. And for those who do get answered, average wait times will be 30 minutes or more. So now the IRS will take even more time and money away from hard-working taxpayers. A few years ago, the National Taxpayer Advocate estimated Americans spend 6.1 billion hours preparing and filing their tax returns. Tax compliance comes at a steep price, costing the taxpaying public valuable time and money.
Q: Is it possible for Congress and the President to push the re-set button on the federal tax code?
A: With all the uncertainties surrounding tax compliance, one prevailing concern ranks high among the taxpaying public. The federal tax code is too complex. When taxpayers sit down to file their returns, a confusing collection of deductions, credits, exclusions, exemptions and phase-outs must be taken into consideration. It’s little wonder so many taxpayers turn to professionals for help. The non-profit, non-partisan Tax Foundation says that tax experts need to be well-versed in more than 70,000 pages of federal statutes, regulations and case law to have a strong command of the federal tax code. The National Taxpayer Advocate estimated in 2011 that the federal tax code exceeds more than 3.8 million words. There is a glimmer of good news. With new leadership taking the helm in the 114th Congress, the stars are aligning to simplify the tax code. The Constitution vests authority in the people’s branch to provide for the common defense and general welfare of the United States, so Congress legislates how to raise revenue that will protect national security and fund public services for the public good. The last major legislative overhaul to reform the federal tax code passed more than a generation ago in 1986. Since then, Congress and the presidents at the time have tweaked and tinkered with the tax code, adding provisions and extensions that influence behavior and set public policy. For example, research and development tax credits help trigger economic growth and job creation. Other tax incentives help foster home ownership, encourage savings for higher education and retirement, support charitable giving, subsidize health insurance and give tax breaks for state and local taxes. These provisions are popular, but applying for them can be a headache. An important caveat to whether tax reform is achievable is that Congress can’t do it alone. Major tax reform requires leadership from the President, using his bully pulpit to help create a consensus among taxpayers and Congress alike. President Reagan was highly involved in the last successful tax reform effort in 1986.
Q: What is your tax reform survey?
A: Taxpayers overwhelmingly agree the federal tax code is too complex. And the idea of starting over with a clean slate is very appealing. Obviously, it’s much easier said than done. Congress needs to take a hard look at the menu. Choices that may seem appetizing to some may give indigestion to others. As a fiscal conservative, I’d like to see comprehensive tax reform include discussions about balancing the budget and keeping federal revenues within historical limits as a share of the economy. Simplification also needs to make tax compliance less intimidating and less expensive. As a former chairman and senior member of the tax-writing Finance Committee, I’m co-chairing a panel tasked with scrutinizing individual tax reform. We will report specific proposals to the full committee in May. As I so often tell Iowans who attend my town meetings, representative government is a two-way street. I make it a priority to listen and learn. At the same time, Iowans have a duty to hold up their end of the bargain to strengthen our system of self-government, especially when it comes to paying for it. That’s why I’m casting a wide net to reach as many Iowans as possible on this important issue. I’ve created a brief survey on my website for Iowans to give me feedback so that I may bring their voice directly to the policymaking tables. The survey asks Iowans to rank priorities and share views on individual tax breaks that are important to their households. The survey will run through Tax Day, April 15, 2015. Iowans may go to www.grassley.senate.gov and click on the Tax Survey tab or find a link on my Facebook page. If you are fed up and find tax compliance too expensive and too confusing, please register your views. The tax reform train won’t leave the station without broad support from the taxpaying public.