Hatch urges Congress to work on simplification of tax code

To kick off a hearing on the U.S. tax code, Senate Finance Committee Chairman Orrin Hatch (R-UT) delivered an address on Tuesday covering one of the principles Republicans would like to see in any new tax law – simplicity.

“This is the third hearing the committee has held to explore the principles of tax reform embraced by President Reagan nearly three decades ago,” Hatch explained. “Those principles were efficiency, fairness and simplicity. We have held hearings on the importance of growth and efficiency, and of fairness, in tax reform. Today, we will discuss the problem of complexity in the tax code and the merits of simplification.”

Hatch cited that the tax code has grown to a length of nearly 4 million words, and that taxpayers and business spend billions of hours and dollars each year attempting to decipher it.

“Wouldn’t that money be better off in the hands of hardworking taxpayers instead of devoted to complying with our overly complicated tax code?” Hatch asked. “Complexity should be a matter of concern for tax policymakers because it makes it more difficult, time-consuming and expensive for taxpayers to comply with the law and for the IRS to enforce it. Complexity also reduces perceptions of fairness in the tax system and can decrease voluntary compliance with the tax laws.”

Hatch stressed that simplification does have its trade-offs. 

“For example, there is often a tension between fairness and simplicity,” Hatch said. “Simple statutes may not be fair because they lump together taxpayers who, in fairness, should be treated differently. And statutes that comprehensively address relevant distinctions between taxpayers, leading to fairness, tend to be more complex. But, no one said tax reform would be easy. These tensions and tradeoffs come with the territory and should not deter our efforts.”

The hearing continued with four witnesses considered experts on tax reform, who discussed the pros and cons of simplification of the tax code.