WASHINGTON, D.C. – House Ways and Means Tax Policy Subcommittee Chairman Peter Roskam (R-IL) today delivered the following opening statement at a Subcommittee hearing focused on how tax reform will simplify our broken tax code and help individuals and families.
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Remarks as prepared for delivery:
“Think about it. Right now on my phone I can pull up an airline’s app, pick a flight to O’Hare airport, see the price, pick my seat, get a boarding pass, and have not just a hope, but an expectation that I will be able book travel halfway across the country in under a minute, and if I have to wait for that loading circle for more than ten seconds I think, ‘This thing is junk.’
“Contrast the simplicity of that with our tax code which is so complicated that every year the majority of taxpayers cannot figure out how much money they owe. Our tax code has grown so bloated over the last 30 years to the point that it is a drain on our productivity and a headache for every single taxpayer.
“Now here’s the good news, nobody likes it and nobody defends it. People like particular provisions, but no one is defending this tax code in its entirety. Here’s the better news, we have a solution that will grow the economy, dramatically simplify the tax code, and lower your tax bill every year.
“Last week we discussed the importance of growth. Taxpayers would see growth from tax reform in the form of an estimated 1.7 million more jobs and 7.7% higher wages, but today we focus on the burden of filing taxes as an individual. Every year millions of Americans spend hours trying to figure out what they owe. In fact combined, Americans spend 2.6 billion hours trying to calculate what they need to pay Uncle Sam; this translates to $409 billion in lost productivity. What should be a simple calculation is so complicated, that 9 out of 10 people either pay for a professional or for software just to figure out how much they owe the government.
“When I think about a household filing taxes, I like to think about a family in Palatine, Illinois sitting at their kitchen table with a box full of receipts trying to figure out what they owe. They’re looking at the 1040 and they’re trying to figure out what deductions they can take. Can they deduct enough for them to itemize or do they want to take the standard deduction? Do they qualify for the additional standard deduction? Can they take both the personal exemption for their children and the child tax credit? And when they get really confused about how much they need to pay the government, they can read the IRS’s Tax Guide for Individuals, and by page 206 they will finally have gotten far enough in to begin reading the section entitled ‘How to Figure Your Tax.’ The whole time they’re thinking in the back of their heads that if they had enough money to hire someone to do it for them, they would be paying a whole lot less in taxes. That’s because in the more than 30 years since we last substantively reformed the tax code, it has ballooned with special interests. The standard tax form – the 1040 – now contains more 80 different line items and the additional complexity is a cost for all of us. Clearly something is inherently unfair when the family from Palatine pays more to the government in taxes because they don’t pay a professional to prepare their tax return.
“What we propose for individuals filing taxes is this postcard. If you can add and multiply, you can do your own taxes. No more uncertainty and no more worrying if the government will come after you. We will have this postcard in hard form and online for every taxpayer to use. How did we make it this simple? First, we eliminated all but two deductions. Next, we took the 7 tax brackets and reduced them to 3, lowering the tax rate for all Americans in the process. Then we paired together the standard deduction, the additional standard deduction, and the personal exemption for taxpayer and spouse and we used the savings from eliminating deductions to nearly double standard deduction, which we expect that 95% of Americans will use. Finally, we combine the child tax credit with the personal exemption for children and dependents into one larger credit. With these changes Americans will no longer have to worry if the wealthy get a better deal on taxes – it will be laid out in plain English for all to see.
“As a committee, we now have a choice. We can accept high tax rates and a confusing code or we can grow the economy, lower taxes for everyone, and create a fair system that Americans can trust. I think the choice is clear.
“With this in mind I am pleased to welcome our witnesses. I look forward to hearing your testimony and working with my colleagues on both sides of the aisle to determine how best to create a tax code that helps all Americans, including that family from Palatine.”