Promoting Sound Tax Policy
As a taxpayer, you’d probably like to see some changes in the tax system. So do we. While the AICPA does not take positions on specific tax rates, we have many ideas and principles for making the system work better.
For starters, simplify! American taxpayers and businesses spend 6.1 billion hours a year complying with tax filing requirements. The National Taxpayer Advocate told Congress this year, “If tax compliance were an industry, it would be one of the largest in the United States.”
When tax laws become too complex, there’s an impact—people get frustrated and pay less than what they owe or they make mistakes and pay too much—either way, our system is tagged as unfair. The AICPA understands the consequences of tax law complexity and has supported efforts to move toward a simpler tax system.
Second, clean the windows. As taxpayers, we have a right to know about the taxes we pay. A good tax system—one that facilitates and encourages compliance—has to be understandable to those who are expected to pay the tax and by those who administer the tax. This is the principle of transparency, which inspired us to create the Total Tax Insights calculator.
Third, keep it fair. We can’t expect to get our bridges, water, public safety and other benefits provided by federal, state and local governments for free. We have to pay a certain amount and ideally, over the long run, we receive approximately the value for what we pay. Yet, the AICPA also recognizes that fairness is a complicated concept that goes beyond a simple exchange of taxes for services or infrastructure. We challenge lawmakers to consider the entire picture.
Questions we raise on fairness principles include: Are taxes based on ability to pay? Do taxpayers have a voice in the tax system? Is one group favored over another? How will this tax affect compliance equity, that is, will it make it difficult for taxpayers to comply on a timely basis?
There’s more to this story. These are 3 of the 10 guiding principles of good tax policy the AICPA has developed for lawmakers and decision makers to use when analyzing tax proposals. To learn more about our recommendations and principles, visit our tax reform website.
On behalf of its members and the taxpaying public, the AICPA will continue working to ensure that Congress is aware of these principles as it considers various tax reform proposals to produce a fair, transparent and simpler tax system.