November 26, 2014

The High Cost of Complexity in the Tax Code

  • The nation's fiscal future depends on the balance between the spending in the federal budget and the revenues flowing into the treasury. Tax policy...

IRS National Taxpayer Advocate Nina E. Olson released her annual report last week, saying that additional funding could improve revenue collection and customer service. As The Concord Coalition has previously argued, however, a more comprehensive solution would be for Congress to reform and simplify the tax code.

Over the last 3 years, the Internal Revenue Service has lost nearly $1 billion, or 8 percent, of its funding -- the result of Congress focusing deficit-reduction efforts primarily on just one part of the federal budget (“discretionary” spending that lawmakers approve annually).

Olson’s report says the agency’s continued difficulty with providing high-quality service to taxpayers is due to both a shrinking budget and the complicated tax code.

A simplified and more efficient tax code that eliminates the long list of unnecessary tax expenditures would make it easier for the IRS to enforce tax provisions and collect revenue while better promoting economic growth.