Test your knowledge of tax-reform history by identifying the year various statements were made.
by Annette Nellen, CPA/Esq.
The current Congress introduced over 50 bills dealing with tax simplification. But it certainly isn’t the first time attention has been devoted to addressing tax law complexity. Tax reform was also a topic for the 110th Congress, as well as President Bush and the Treasury Department. Again, we’ve heard a lot about this topic before — but just how often?
The dates the following statements were made may surprise you, as might their similarities, despite the decades they span. Quiz yourself and see how you do. No cheating. The dates and sources are at the end of the article.
- In view of the fact that a new revenue bill is contemplated during the coming session of the Congress, it is thought imperative to transmit to the Ways and Means Committee a preliminary report recommending methods of preventing tax evasion and avoidance, together with certain suggestions for improving and simplifying the revenue laws.
- The Congress believes that simplification of the Code is urgent and that the Joint Committee should make a specific study involving ways of simplifying and indexing the tax laws.
- The Joint Committee on Taxation is to make a report once in each Congress … on the overall state of the Federal tax system, together with recommendations with respect to possible simplification proposals and other matters relating to the administration of the Federal tax system as it may deem advisable.
- We have no doubt that improvement in the area of simplification is an achievable goal within the context of our present tax system. But it will take the clear resolve of the Congress, the Administration and knowledgeable professional groups to do so.
- It may fairly be urged that our present system of Federal income taxation is unduly complex. At any rate, little in the way of simplification has thus far been accomplished by revision. Each successive act has been more elaborate than its predecessor; and the maze of administrative and judicial technicalities surrounding the taxpayer has been steadily thickening.
- The most serious problem facing taxpayers today is the complexity of the Internal Revenue Code.
- The economic crisis in America is real … Our strength to compete with foreign products is ebbing … The Federal Government relies heavily on income and payroll taxes. But income and payroll taxes — forced higher by inflation — are discouraging employment and investment. Today’s income tax laws drive the Nation to spend and borrow — rather than save and invest in a more productive economy.
- Of course we must reduce the deficit, lest we mortgage our future prosperity. But we must not ignore the need for fundamental fairness. We must also recognize that without tax reform, our attempts to lower interest rates by cutting spending will likely fail. The reason is that high interest rates have multiple causes, one of which is that the current tax system subsidizes borrowing.
- There has been increasingly widespread dissatisfaction in the United States with the Federal tax system. Numerous special features of the current law, adopted over the years, have led to extreme complexity and have raised questions about the law’s basic fairness … Previous efforts at tax reform have not attempted a thorough rethinking of the entire tax structure. As a result, reform legislation over the past 25 years has consisted of a series of patchwork palliatives, leading to a tax system increasingly difficult to understand.
- The complexity of our tax code breeds a perception of unfairness and creates opportunities for manipulation of the rules to reduce tax. The profound lack of transparency means that individuals and businesses cannot easily understand their own tax obligations or be confident that others are paying their fair share.
- We need to fundamentally rethink the tax code with a view to enhancing American competitiveness in the new global economy and helping the American workforce. In order to ensure that we enact policies that will lead the United States into the 21st Century at the forefront of competition … I intend to hold hearings … to explore the ramifications of the changing world economy and the needed reforms in both the international tax and trade areas … We must determine how our existing international tax regime, which was designed to address the needs of a totally different age, can be re-engineered to complement the changing international marketplace and changing business profiles. We must also strive to encourage the creation of more jobs that draw on these new opportunities.
- The U.S. business tax system must help U.S. companies and workers compete globally by taking into account the increasingly integrated global economy. With a view to maintaining our competitiveness, U.S. tax policy must respond to and anticipate changes in the global marketplace. The current U.S. system is far from optimal and we cannot afford to be left behind as other nations modernize their business tax systems, including the taxation of foreign earnings.
- It has been found that the present system of State taxation as it affects interstate commerce works badly for both business and the States.
- Obsolete state tax systems are not producing the revenue states need. But what's becoming clear today is that those tax systems are not only failing to keep up with the dramatic shifts in the U.S. economy. They are a drag on economic growth.
When the Statements Were Made
It’s time for the real answers. Here you go:
- 1933 — Prevention of Tax Avoidance, a preliminary report of a House Ways and Means Subcommittee, December 4, 1933; available from Tax Analysts’ Tax History Project.
- 1976 — Joint Committee Explanation of the Tax Reform Act of 1976 (P.L. 94-455; October 4, 1976), p. 135.
- 1998 — Joint Committee on Taxation (JCT), General Explanation of Tax Legislation Enacted in 1998 (PDF) (JCS—6—98), November 24, 1998, p. 141. The JCT’s first report, Study of the Overall State of the Federal Tax System and Recommendations for Simplification (JCS-3-01), April 2001, consists of more than 1,300 pages of simplification proposals.
- 1982 — AICPA testimony before the Senate Committee on Finance on Flat-Rate Tax, Part 2 of 2, 97th Congress, September 30, 1982, p. 195.
- 1923 — Suggestions for Simplification of Federal Income Taxation, The National Income Tax Magazine, August 1923, Vol. I, No. 7.
- 2006 — National Taxpayer Advocate, 2006 Annual Report to Congress (PDF), p. 3.
- 1980 — Statement by Congressman Ullman upon introduction of H.R. 7015, the Tax Restructuring Act of 1980, which called for income and payroll tax cuts offset by a new value-added tax. Congressional Record, April 2, 1980, p. 7481.
- 1985 — Statement by Senator Bradley upon introduction of the Fair Tax Act of 1985 which proposed broadening the income tax base and reducing individual tax rates to 14 percent, 26 percent and 30 percent and the corporate rate to 30 percent. Congressional Record, February 6, 1985, p. S1173.
- 1977 — U.S. Department of the Treasury, Blueprints for Basic Tax Reform, January 17, 1977, p. 1.
- 2005 — Final Report — President's Advisory Panel on Federal Tax Reform, November 1, 2005, p. xiii.
- 1998 — Senator Roth, U.S. Finance Committee Chair Roth's Address at Forum on Taxation of Multinationals, Tax Notes International, 98 TNI 192-24, October 1, 1998.
- 2008 — U.S. Department of the Treasury, Statement for the Senate Finance Committee Hearing on International Tax Reform, June 26, 2008.
- 1965 — State Taxation of Interstate Commerce, report of a special subcommittee of the House Judiciary Committee, 89th Congress, Vol. 4, September 2, 1965, p. 1127 (the Willis Commission report).
- 2008 — Barrett and Green, Growth and Taxes: The Stifling of Economic Vitality, Governing, January 1, 2008.
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, CPA, Esq., is a tax professor and Director of the MST Program at San José State University. Nellen is an active member of the tax sections of the ABA and AICPA. She serves on the AICPA’s Individual Income Taxation Technical Resource Panel. She has several reports on tax reform and a blog