Taxpayers are uneasy about the end product; therefore, the bold promise (also made with the Brady-Ryan “Better Way” Plan) that the income tax will be so simplified that the average taxpayer will only have a postcard-like tax return to file. Will that promise be honored? Ignored is that the IRS is in charge of designing the tax forms. Indeed, the tax return is the first thing the IRS looks to when auditing for tax compliance.
By James K. Jeanblanc l November 14, 2017
Texas Rep. Kevin Brady, Chairman of the tax-writing House Ways & Means Committee, displays the tax-filing ‘Postcard’ for the Republican Tax Plan, as Speaker of the House Paul Ryan looks on. Photo by Alex Wong-Getty Images
The “Tax-Cut and Jobs” bill now before Congress is still a work-in-progress, originating from the earlier Brady-Ryan “Better Way” Plan.
The purpose is to rejigger the tax mess, not real reform.
The rejiggering is to change the number of tax brackets, alter the tax rates, and recast many of the tax breaks (ending many and adding new ones).
At this point, it’s unclear what will be the final rejiggered product. However, what is clear is that, despite the system itself being of flawed design and fostering the very tax mess now being rejiggered, the rejiggering Establishment wants it left in place and un-reformed.
The tax system functions as a person-taxing system, not as a true income tax.
It’s based on the universal requirement that all taxpayers must file a personal tax return to claim their personal tax breaks and pay the tax which is actually imposed on them, not income. As such, this person-taxation system is ideally suited for the Establishment to easily pick tax winners and losers and manipulate the economy.
A rocket scientist is not required to see this system incompatible with achieving and maintaining real income-tax reform – for the income tax to be remade into a true income tax and seen by all as simple and understandable, compliance-easy and tax-efficient, and low-rate and tax-neutral.
The rejiggering now underway follows that of the Tax Reform Act of 1986, but this time, there is less enthusiasm.
Taxpayers are uneasy about the end product. Despite the number of taxpayers to be added to the non-paying populace, there are many others (still required to pay) unable to see their positive benefit.
Dissention is high in the ranks; therefore, the bold promise (also made with the Brady-Ryan “Better Way” Plan) that the income tax will be so simplified that the average taxpayer will only have a postcard-like tax return to file.
But will that promise be honored?
Ignored is that the IRS is in charge of designing the tax forms.
Indeed, the tax return is the first thing the IRS looks to when auditing for tax compliance. Can taxpayers be trusted to accurately enter their totals on that postcard return?
Surely, if not at the outset, the IRS will eventually require more details to be reported, resulting in a longer return and even schedules to be attached. And, as indicated above, with the existing universal tax-return system continued, the tax-mess weeds will grow back, requiring yet another rejiggering in coming years leaving us pretty much where we are right now.
So, Jean-Baptiste Alphonse Karr’s observation rings true, “The more things change, the more they stay the same.”
James K. Jeanblanc is tax counsel to the law firm, Grove, Jaskiewicz & Cobert in Washington, D.C. During the tax reform act of 1969, he was directly involved in the House-Senate drafting sessions. He is a graduate of the University of Illinois School of Law and received his LL.M. degree in Taxation from George Washington University. He is a former adjunct professor of law for the Tax Policy Seminar in the graduate law program of the Georgetown University Law School and has been a lecturer of law in the graduate law program of the George Washington University Law School. He is a former chairman of the Committee on Tax Accounting Problems of the Tax Section of the American Bar Association. Formerly, he was an attorney in the Office of the Tax Legislative, U.S. Treasury Department and an Assistant Branch Chief of the Corporate Tax Branch of the Legislation and Regulations Division of the Internal Revenue Service. He is the author of the FreedomTax and has a half-century of income tax experience involving tax legislation, tax regulation, IRS ruling, tax planning, and tax controversy matters. He is Senior Fellow for Tax Policy at the Selous Foundation for Public Policy Research and a contributor to SFPPR News & Analysis.