A Guide to Protecting Taxpayers

The COVID-19 pandemic tested the foundational strength of the American economy. After initial unemploy- ment eclipsed 17 percent, the economy sprang back to life, poised to make a strong come back in 2021 and beyond. This fundamental strength is a result of an entrepreneurial spirit and a newly revamped tax code that incentivizes businesses to return to the country and helps businesses already here expand.

Even with the passage of the Tax Cuts and Jobs (TCJA), the federal tax code remains onerous for businesses and individual. Expensive armies of accountants and tax lawyers must parse through the tax code as well as the administrative clarifications and case law surrounding the code every year. That is roughly 75,000 pages of material. It’s little wonder that compliance and filing costs often rival actual tax payments.

Despite a significant reduction in the federal corporate tax rate in the TCJA, the overall rate remains high at 21 percent and the Biden administration is committed to once again raising it. Furthermore, businesses making job-creating investments must mull over how their newly acquired assets must be written off over the metic- ulous depreciation schedules maintained by the Internal Revenue Service (IRS). Even the mechanics of how exactly business earnings are taxed is a complicated question that poses headaches for companies and their hired consultants.

These costs may seem confined to the corporate world, but America’s complex, and high-cost tax code has implications beyond the C-suite. Every dollar consumed by taxes and tax preparation is one dollar less that can be used to hire new employees, raise wages, and expand offerings to consumers. The opportunity cost of a high-cost tax system will only grow as America emerges from the coronavirus pandemic and new investment opportunities emerge in a nation coming out from lockdowns. It is clear that further tax reform is not only an option, but a necessity to keep the U.S. growing and expanding opportunities to as many people as possible. To understand the stakes involved, it is necessary to explore the many intricacies of the tax code. This report will help identify some of the leading issues facing taxpayers today and explore prospects for reform.

This report is also a warning to President Biden and members of Congress to not raise taxes.