To Fix Our Broken Tax System, Sunset the Tax Code
March 11, 2016
IRS Headquarters, Washington, D.C.
Tax reform is critical to ensuring our economy recovers from the sluggish growth it has been experiencing. Real individual and corporate tax reform will boost the middle class and encourage more business investment at home. President Obama, members of the House and Senate, groups like the Taxpayers Protection Alliance (TPA), and individual Americans have all weighed in on how to get tax reform done. There is agreement that the code needs to be overhauled. There is also agreement that the corporate tax rate is too high. There is now a new path forward with legislation in the House that guarantees something will be done when it comes to fixing our broken tax code.
H.R. 27, the Tax Code Termination Act, introduced by House Judiciary Chairman Rep. Bob Goodlatte (R-Va.), puts in place a blueprint to get rid of the current code, have a timetable for a new code to be approved, and then have that new code ultimately adopted.
According to sunsetthetaxcode.com, the legislation:
- Terminates the Internal Revenue Code of 1986 after December 31, 2019, except for self-employment taxes, Federal Insurance Contributions Act (FICA) taxes, and railroad retirement taxes.
- Requires a two-thirds majority vote in Congress to change such termination date. Declares that any new federal tax system should be a simple and fair system that: (1) applies a low rate to all Americans, (2) provides tax relief for working Americans, (3) protects the rights of taxpayers and reduces tax collection abuses, (4) eliminates the bias against savings and investment, (5) promotes economic growth and job creation, and (6) does not penalize marriage or families.
- Requires that the new federal tax system be approved by Congress in its final form by July 4, 2019.
Tax reform has been a difficult lift for many years and it’s been nearly three decades since the last overhaul of the tax code was signed into law. Allowing the tax code to “sunset” would get rid of the broken tax system we have, but it would also ensure that Congress and the President put in place a simpler, fairer, and more streamlined code that would benefit all working Americans.
The two-pronged approach of getting rid of the code first is critical to the process. As one of the key leaders of the movement to Sunset the Tax Code, Colin Hanna of Let Freedom Ring, noted in RedState.com:
If Congress approaches tax reform from the perspective of the current code, all we are likely to see are small, incremental changes that may end up making the code even worse. The only way to create a sense of urgency about tax reform is to, first, sunset the current code.
Rep. Goodlatte’s legislation now has 100 cosponsors in the House, including Democrat Rep. Collin Peterson of Minnesota. This is bipartisan legislation, and the House should consider taking this up for a floor vote. The sunset of the tax code would not happen for a few years, giving Congress plenty of time to put together a new way forward for our tax structure that would be less complicated for individuals and businesses.
Chairman Goodlatte said it best when he began his push to sunset the tax code last year:
“We must force Congress to tackle tax reform head on. The best way forward is to scrap the current tax code and start fresh.”
The way forward on tax reform would best begin by eliminating the broken and unworkable tax code we have in place now. There is too much time and money being spent by Americans on compliance year to year and that has to change. The first step is to eliminate the problem, and H.R. 27 does that and more by making sure there is time allowed in order to put forward a new and more manageable tax structure for current and future generations.