Magazine article The CPA Journal

A Call for Individual Tax Simplification

Magazine article The CPA Journal

A Call for Individual Tax Simplification

Article excerpt

News & Views

Personal Viewpoint

The accounting profession should be foremost in representing taxpayers' interests.

Tax complexity reached an unprecedented level with the passage of the Economic Growth and Tax Relief Reconciliation Act of 2001. For example, the act contains three-year phase-outs of the personal income and itemized deduction and, incredibly, is completely rescinded on December 31, 2010. A massive congressionally mandated treatise on tax simplification by the Joint Committee of Taxation was released around the same time as the passage of the act.

The present environment urgently calls for practicing tax professionals and tax academics to formulate an aggressive plan of action to address tax complexity. To be effective, this endeavor needs to focus first on individual taxation.

In February 2001, the AICPA, the American Bar Association (ABA), and the Tax Executives Institute (TEI) sent a message to Treasury Secretary Paul H. O'Neill: "The income tax system has now reached a critical juncture. ... American taxpayers have lost not only the ability to understand and comply with the law without expending considerable resources, but also respect for a tax system."Although they articulated a collective willingness to work with the administration, any pretense of a meaningful politically led tax simplification effort was abandoned with the passage of the 2001 Tax Act. As AICPA Tax Executive Committee member Pam Pecarich observed, "[I]f we want compliant taxpayers, we need a system that makes sense and is viewed as reasonable by taxpayers."

The impossibility of a political solution was confirmed at a December 2001 conference on simplification held by the AICPA, ABA, and TEI in Washington, D.C. At the conference, the House Ways and Means Chair advocated initial repeal of only the corporate alternative minimum tax (AMT) but not the individual AMT, a change that clearly favors special interest groups. In another example, congressmen said that the complex array of IRC provisions dealing with education were too popular to be changed. The AICPA and other groups have made simplification efforts in the past, but on the whole their attempts have been piecemeal and half-- hearted. …

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