Escalating Income Tax Complexity: Causes and Cures
POLICY FORUMThursday, July 26, 2001
11:00 a.m.
Featuring Rep. Rob Portman, Committee on Ways and Means; Mary Schmitt, Joint Committee on Taxation; Eugene Steuerle, Urban Institute; Steve Entin, Institute for Research on the Economics of Taxation.
The Cato Institute
1000 Massachusetts Avenue, NW
Washington, DC 20001
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This year's $1.35 trillion tax cut law reduced tax rates and liberalized the rules on retirement savings plans. However, the tax law did not slow the progression of the income tax code toward ever greater complexity. In fact, the law made 441 changes to the tax code and created a complex series of phase-ins for tax provisions. Since the mid-1980s, there has been a 74 percent increase in the number of pages in the tax code and regulations. This excessive complexity was recently documented by the Joint Committee on Taxation in a 1,300-page report. Will Congress act on the committee's proposals, and will that be enough? Beyond the proposals, moving to a consumption-based tax could greatly simplify federal taxation by eliminating many inherent complexities of the current system, such as capital gains and depreciation accounting.