Meeting for the first time on Wednesday, the tax reform panel appointed by President
Bush began exploring the complexities of the current US tax
code, as the march begins towards a simplification or overhaul of the income
tax system.
Demonstrating the size of the task ahead, US Treasury Secretary John Snow,
the first witness to speak at the hearing, observed that at more than a million
words long, the Internal Revenue Code and regulations has more than doubled
in terms of page-length over the past twenty years, whilst the current version
of the ‘short’ income tax form still takes more than 11 hours to prepare
- about the same as the ‘long form’ did ten years ago.
“The code is so filled with loopholes, exceptions and lengthy explanations
that individuals and businesses spend more than six billion hours every year
on paperwork and other tax headaches,” Snow stated.
“Imagine what this great country could do if we could get a few billion
hours back. And that's why we're here today. To talk about how we can take those
billions of hours away from the tax code nightmare and give them back to the
terrific productivity and creativity of the American people,” he added.
According to panel chairman Senator Connie Mack, broad options for reform will
be considered, ranging from the modification of current law, a comprehensive
overhaul of the existing system, or a more radical uprooting of the current
structure, and its replacement with a completely redesigned system.
In order to help the panel arrive at their decisions, Mack invited both businesses
and individuals to contribute to the process by detailing their own tax “headaches”
and describing how business and personal decisions are distorted by tax rules.
Mack also indicated that the panel will explore ways of overhauling the Alternative
Minimum Tax system, warning that the 3.8 million taxpayers confronted by the
system this year will grow to 51 million by 2015 if no action is taken.
“Americans are demanding a better tax system. It should be simple, transparent
and easy to understand. It should be stable and predictable – in order
to permit informed planning and decision making. It should encourage economic
growth. And it should minimize the costs of compliance and intrusion into the
lives of taxpayers,” Mack argued.
While the tax reform agenda remains something of a blank canvas at present,
the panel’s vice chairman, former Louisiana Senator John Breaux, has hinted
that the members may be leaning towards some form of system that will combine
elements of an income tax and consumption tax.
"I think combinations of ideas need to be looked at very carefully,"
he told reporters after the meeting.
"Going all-in-one in one direction or going to all-in-one in another direction...is not, in my perspective, the best way to approach it,” he added.
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