By now, we’ve all collected the necessary paperwork from our employers, our banks and others, filled out the complicated tax documents – or more likely, purchased software or hired a professional to fill them out for us – and sent it all in for the IRS to examine.
Filing taxes has become a complex and time-consuming process that takes up more than 6.1 billion hours and over $168 billion to complete every year. It serves as a good reminder of how complicated our tax code really is and why it’s so important that we pass comprehensive tax reform.
As many of you know, President Obama released his budget last week. I was disappointed to see that the administration stops short of offering any meaningful reform to our tax code. Instead, President Obama proposes tax increases and the elimination of some deductions for the wealthiest Americans – a decision that translates into a $580 billion tax hike.
This additional revenue piles on top of the $600 billion tax increase that resulted from the President’s fiscal cliff deal and the billions of dollars in new taxes that were created by the passage of Obamacare.
While the administration says the tax hikes only impact America’s richest families, the tax increase ultimately hits thousands of small businesses, known as Subchapter S Corporations, which file their taxes as individuals. These are job creators that would much prefer to use the money to increase wages, hire more employees or invest in innovation.
Nationwide, 94 percent of small businesses are treated as individuals by the IRS – and 53 percent of Texans are employed by such a company.
I have long supported an approach that not only makes the tax code and the tax filing process simpler but also keeps more money where it belongs: in your pocket. First, we must ensure the tax code allows businesses to compete on a level playing field so they can better innovate and grow. This means eliminating unnecessary loopholes.
Second, our overall tax structure can be simplified. For example, two weeks ago, the House passed a budget that would reduce the number of individual tax brackets from six to two: one would pay 10 percent, the other 25. We must also look at and streamline other areas, including the collection, enforcement and filing process.
Finally, tax reform must lower the overall tax rate for both businesses and individuals. We cannot balance the budget through relentless tax increases – especially increases on small businesses. Job creators must be encouraged to reinvest more money into the economy, putting America back to work and broadening the tax base.
In the coming weeks, I expect that a comprehensive tax reform bill will be put forth by the House Ways and Means Committee. Through working groups and more than a dozen hearings, the Committee is taking a critical look at how to make our tax system more efficient and I have been very supportive of their efforts.
It is my hope that the President and the Democratic Senate will come together with my fellow House colleagues to implement a tax reform package that makes April 15, 2014, a little less complicated and costly. I will be in touch as Congress and the administration continue to work through the process of changing the way taxes are done in America.
Congresswoman Kay Granger represents the 12th District of Texas in the U.S. House of Representatives.