Writer Suggests Ways to Simplify Tax Code

[1] I would like to discuss the IRS Personal income Tax Code. The enclosed suggestions may help you pursue with other Congress members and the IRS some ideas to make the tax a simpler and/or fairer one.

[2] First, let me give you some background. I have been an AARP Tax Aide Volunteer (unpaid) for 15 years in New Jersey, Vermont and Florida to help persons comply with the Congress/IRS tax code and complete their tax returns. In order to do this volunteer work, I have had to take a difficult written examination each of those years and to pass the test. I have been an instructor and taught other AARP volunteers in Fort Myers with regard to the tax code as well as having been the coordinator at Shell Point Village in Fort Myers where over 440 taxpayers were assisted during February to April in 2000.

[3] I have prepared my own personal income tax returns (both the individual and the married filing jointly status) for over 50 years without the assistance of a Professional tax preparation organization. I have my engineering bachelor's degree from Rensselaer Polytechnic Institute and my master's and doctor's degrees from Massachusetts Institute of Technology so I have been immersed in figures and mathematics. In 1944, I received my Ensign's, commission from the United States Naval Academy so I have also been exposed to the expenditure of taxpayers' money.

[4] With the above general information, I believe I am qualified to make some suggestions with regard to the tax code based on my own background as well as some comments from the many persons with whom I have come in contact. I speak as an American citizen who has paid income taxes for over 50 years.

[5] Enclosed with this letter is a partial list of items, (some controversial) that the Congress/IRS should consider in making the tax code a simpler and/or fairer tax code. This will be a difficult task as it has taken over 80 years for the tax code to evolve into its present complex state. It will take years, and the cooperation of many factions to improve the code. Remember that about 50% of the total income to operate the United States Government comes from the personal income tax so you are dealing with a very important matter.

[6] I would be pleased to know your thoughts on this important matter that affects every citizen of United Sates, including Congress and the IRS. Could you please forward my answer to the appropriate persons who will write the future tax laws for the consideration? If I can help further, please let me know.

Sincerely,

2. Appoint a non-political, independent, blue ribbon commission to rewrite the tax Code. The personnel should be highly respected and come from business, engineering, accounting, legal, and all other areas in which contributions can be made. High and low income personnel should be included. The IRS and Congressional Staffs should be available to assist the Committee. After an appropriate time the Committee should issue a report to the Congress and the American people as to their recommendations.

3. Keep the tax code simple. Use it to collect money. Do not use it to solve social problems. Social problems must be solved but do that through a direct approach. As an example, if a student needs financial help to attend college, give it to him directly through the school and not through a plethora of tax breaks on the IRS tax code.

4. Consolidate the 1040, 1040A, 1040EZ and 1040NR Forms into one form which would save duplication of forms and instructions and make it simpler for the taxpayer.

5. Eliminate the Presidential check-off. Most people check NO. Who gets this money? Let Congress appropriate the money if it is so important. Does Congress not have to replace the money diverted by the Presidential check-off to pay for the operation of the U.S.Government?

6. All income should be taxed. Why do we have tax free money? Money is fungible. All projects should stand on their own merit and pay the going rate when they borrow money. We pay income tax on U.S. government bonds -- why not tax State and Municipal bonds. All Social security payments should be counted as income. All government pensions should be counted as income.

7. Have the Congress/IRS tax code apply to the entire calendar year and not one law for part of the year and a different law for another part of the year. An example was the gasoline mileage allowance for work related travel in 1999. Probably the entire Federal fiscal year should be changed to a Calendar year basis so the average citizen can relate the U.S. budget to his own financial accounting, rather than allowing the U.S. Government to push expenditures and revenues from one year to another year in their reporting practices. Also, U.S. figures would be directly comparable with other national and world year reports.

8. Eliminate the home mortgage deduction from the code. Many taxpayers are using this deduction to incorporate their consumer loans and interest payments. Eliminate the State and city income tax payments from the allowed deductions. Eliminate all real estate taxes from allowed deductions.

9. For short term profit or loss determination, calculate it by the year. For example, all transactions in 1999 would have to be held until 2001 to not be classified as short term. The month and day recording would be eliminated.

10. Eliminate inconsistencies and exceptions such as a person reaching age 65 on January 1, 2000 it considered 65 in 1999. This inconsistency Only causes confusion and expense to print these exceptions in all the instruction books.

11. Eliminate all status's except two -- Married filing Jointly and Single which could include head of household and qualifying widow(er). Allowance could be offered directly for the special circumstances.

12. Re-evaluate the Earned Income Credit.

13. The tax code should remain Progressive. The tax rates should increase as the income increases. The Flat Tax essentially does not simplify the tax code as it merely multiplies the final figure by one number rather than by the progressive rates (which is a simple arithmetic procedure) while the entire remainder of the tax code regulations would be the same.

[7] The above suggestions are only the beginning of many constructive changes that should be examined and made in the Congress/IRS tax code by a blue ribbon panel of dedicated, impartial tax persons. The sooner the United States Government takes overt action on the Congress/IRS Income Tax Code, the sooner the American people can prepare their simpler, fairer income tax returns!!!

Copies to:

[8] On behalf of Commissioner Charles Rossotti, I am responding to your letter dated July 14, 2000, in which you want Congress to consider amending the Internal Revenue Codes to change and/or simplify the items discussed in your letter. Your suggestion requires a change to the tax law by Congress. Therefore, I have forwarded your letter to the Office of the Assistant Secretary (Tax Policy) at the Department of the Treasury. That office is responsible for considering proposals such as yours.

[9] If you have any questions about my referral of your letter, please contact Carolyn G. Washington, of my staff, at (202) 622-8773.

Sincerely,