Lawmakers need to overhaul the tax code completely to reduce the “significant, even unconscionable, burden" placed on taxpayers just to file a tax return, the Internal Revenue Service’s ombudsman told Congress on Wednesday.
In her legally required annual report to Congress, the national taxpayer advocate, Nina Olson, estimated that individuals and businesses spend about 6.1 billion hours a year complying with tax-filing requirements. That adds up to the equivalent of more than 3 million full-time workers, or more than the number of jobs on the entire federal government’s payroll.
And filing is only becoming more complicated as lawmakers haggle over new tax breaks.
Since 2001, Congress has made nearly 5,000 changes to the U.S. tax code, or more than one a day on average. Nine in 10 taxpayers now pay money for professional preparers or often-expensive commercial tax software to figure out how much money they owe the government.
One of the advocate’s suggestions for streamlining the tax code was to repeal the alternative minimum tax, a parallel tax system intended to make sure rich Americans pay a fair amount in taxes, which is increasingly engulfing middle-class taxpayers. Another was to reduce the number of income exclusions, deductions and credits, known collectively as “tax expenditures," that clutter up the tax code.