Pamela Olson Speaks Out Over US Tax Complexity

by Mike Godfrey, Tax-News.com, Washington

12 March 2003

Speaking at the Federal Bar Association's 27th annual tax conference in Washington this week, Assistant US Treasury Secretary, Pamela Olson underlined the need for simplification of the tax system, both for individuals and businesses.

Announcing her intention to avoid discussion of the tax topics of the moment - corporate inversion and tax shelters - Ms Olson announced that:

'The basics I want to talk about are the basic problems undermining our tax system. Although there are a number of basic problems, I'm going to focus on three: complexity, the inconsistency of our rules with the values of American society, and the inconsistency of our rules with our economic interests as a nation.'

Speaking with regard to the complexity of the tax system for individuals, the Assistant Treasury Secretary revealed that a recent IRS analysis of the compliance burden estimated the load on individual taxpayers to be around three billion hours and $60 billion per year.

'Our income tax system began as a system intended simply to fund the government. Over the years, successive Congresses and Administrations have proposed and enacted both minor changes and major overhauls. We have grafted on more and more components to the point that the system is nearing collapse,' Ms Olson announced, continuing:

'To be sure, many of the components reflect an increasingly complicated world. But many do not. Often, changes have been designed to hit a revenue target or to patch a hole, real or perceived.'

'We need to go back to the drawing board - back to the drawing board with faith in the American people to do the right thing,' she observed.

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