If you felt overwhelmed or confused this Tax Day, you were not alone. Our tax code is filled with rules, loopholes and preferences. In some cases it is impossible to navigate without a tax professional. On top of being a nuisance to families and businesses, each year, Americans spend billions of dollars and more than 225 million collective hours doing their taxes.
A complex tax code makes it more likely businesses and families make financial decisions based on maximizing tax write-offs, rather than what is best for them. In other words, the tax code distorts our economic activity, keeping families from making the choices they feel are best for their children’s futures, and keeping businesses from pursuing the strategies that best help them grow and create jobs.
Our intricate tax code is the result of generations of writing special loopholes into law. Economists across the political spectrum agree that a less time-consuming, economy-distorting tax code would spark significant economic growth.
Presidents from both parties have put forward plans to simplify our tax code through removing preferences and closing loopholes. President George W. Bush recommended that kind of tax simplification — and so did the bipartisan fiscal responsibility commission appointed by President Barack Obama.
While the importance of tax reform has a history of bipartisan study, the current approach taken by Republican leadership moves in a sharply political direction. Last week’s budget plan put forward by Congressman Paul Ryan gives trillions in tax cuts to the wealthiest while cutting deeply into federal programs, like Medicare and Food Stamps, that help seniors and low-income families.
When added up, the Republican budget fails to seriously address the deficit while harming those in greatest need in our society.
Currently, the Federal government only takes in 14.9% of GDP in revenue, while we spend 24.5% of GDP. With $1.1 trillion of revenue lost each year because of our current tax code, making it simpler and fairer is an important step in reducing our long-term debt.
As we are reminded every April, our tax code is too complicated and accommodating of special interests while not asking a fair share from most of its citizens. Smartly reforming our spending and our tax code will allow our economy to grow, save families time and money, and reduce the deficit.
Rep. James Moran (D) is Virginia’s 8th Congressional District Representative in the U.S. House of Representatives.