Last week, citizens all across our country participated in a 100-year-old American tradition: paying taxes. This year marks the 100th anniversary of the modern income tax.
In 1913, instructions for the 1040 form were just one page. Today, instructions are 189 pages, along with dozens of additional forms. The tax code itself is a whopping 3.9 million words long. Most taxpayers would agree this is not a change for the better.
Simply put, our tax system has become a nightmare. It is too complex, too costly and riddled with too many special interest loopholes. More than 90 percent of American households and small businesses use a tax preparer or tax software to help them prepare and file their taxes. When it is all said and done, Americans spend more than $160 billion and about 6 billion hours a year trying to comply with the tax code.
Without question, our current tax code is hurting our country. In a time of record deficits, experts estimate that the complexity of our tax code contributes to an underpayment of $400 billion annually in taxes rightfully owed. All the while, families and business owners spend hundreds of billions of dollars more each year for record keeping and accounting services needed to comply with thousands of new regulations.
Our families and small businesses deserve a tax code that is simple and fair and free of loopholes. We need a tax code that will not allow some to game the system while others are left footing the bill. Instead, they should be able to sit down and do their own taxes, and they shouldn’t have to wonder if their neighbor has a better accountant and is getting a better deal.
But there is another reason for cleaning up our broken tax code: strengthening our economy. Currently, America has one of the highest corporate tax rates in the world and the cost of complying with our tax code gives other countries a competitive advantage in attracting jobs. We need a tax system that encourages businesses — both small and large — to invest, hire and create jobs right here in America.
Not only is the tax code too complex but our taxes are too high. The Tax Foundation estimates that every dollar each American worker earns this year from Jan. 1 to April 18 will go toward paying their tax bills. In other words, the first three and a half months that you work this year will go toward paying for government.
That’s not fair, and we must do better. By making the tax code simpler and fairer, we can lower tax rates so families can save more, so employers can hire and invest more, and so that there are more jobs and higher wages for workers.
Luke Messer is the congressman for Indiana’s 6th Congressional District and serves on the U.S. House Budget Committee.