Expanding Economic Opportunity
There is absolutely no question that the United States Tax Code needs to be reformed. In fact, it is long overdue.
The Internal Revenue Service (IRS) has in service roughly 480 forms, and an additional 280 forms of explanation. Burdensome tax regulations imposed by our broken tax code are too complicated for most Americans and many must hire accountants to prepare their taxes. If tax compliance were its own industry, it would be among the largest in the country.
According to the IRS, individuals and businesses spend more than 1.6 billion hours a year complying with the filing requirements and responding to filings or audits. This time spent complying with tax laws is equivalent to the work put in by 3 million full-time workers and costs the economy hundreds of billions of dollars annually.
Years of tinkering with the tax code by Washington lawmakers has allowed our government to pick winners and losers in the marketplace. Consequently, we are left with a system that distributes welfare, redistributes wealth and distorts the allocation of resources. The role of government is not to create tax policies that determine how our economy will function. The role of the tax code should be simple: to fund the basic tenets of government.
In my FY2014 Budget Plan, A Clear Vision to Revitalize America, I proposed replacing this broken system with a low-rate flat tax that would eliminate the preferential treatment we see today, yet provide a generous standard deduction and personal exemptions. The flat tax would eliminate every form of unfair double taxation in the United States, including the capital gains, dividend, estate, gift, and interest tax.
I am open to other options as well, but only those that will eliminate much of the complexity and regulation surrounding the current tax code. We need a tax code that helps businesses by being competitive in the global economy with lower rates. And we need to reduce the burden on small businesses and families by making it simpler.