On April 25th, the Congressional Joint Committee on Taxation
released a major report on simplification of the federal tax system.
The report includes more than 1,300 pages of analysis of the current
Internal Revenue Code and recommendations about how to streamline
Did you know that the code consists of some 1,395,000 words? That
the Internal Revenue Service has issued almost 20,000 pages of
regulations containing more than 8 million words? That, to help
taxpayers with their 1999 returns, the IRS published some 649 forms,
schedules, and separate instructions; 159 worksheets; and 340 other
publications. It's all in the joint committee report, and it is sure
to be a best seller among tax policy wonks like me.
The three-volume report is entitled, Study of the Overall State
of the Federal Tax System and Recommendations for Simplification. A
32-page executive summary is already available at the committee's
Web site - http://www.house.gov/jct/ - and the full report should
The report was drafted by the very talented professional staff of
the Joint Committee on Taxation. Volume I of the report is A Study
of the Overall State of the Federal Tax System. The study outlines
the operation of the current federal tax system, discusses the
causes and effects of complexity, and explains some of the efforts
of foreign countries to simplify their tax laws.
Among the sources of complexity that the report identifies, four
* A lack of clarity and readability of the law.
* The use of the federal tax system to advance social and
* Increased complexity in the economy.
* The interaction of federal tax laws with state laws, other
federal laws and standards, the laws of foreign countries, and tax
The effects of complexity include:
* Decreased levels of voluntary compliance.
* Increased costs for taxpayers.
* Reduced perceptions of fairness in the federal tax system.
* Increased difficulties in the administration of tax laws.
Volume II of the report includes a number of specific
recommendations about how to reduce the complexity of the current
federal tax system. Of particular note, the report recommends
eliminating the individual alternative minimum tax. This provision
currently requires millions of taxpayers to compute their tax
liability twice - once under the normal income tax and then again
under the alternative minimum tax. But the Joint Committee staff
believes that the alternative minimum tax no longer serves the
purposes for which it was intended.
The report also recommends getting rid of most of the phaseouts
that curtail personal exemptions, child tax credits, and deductions
for individual retirement account contributions when a taxpayer's
income exceeds certain arbitrary income limits. …