Thomas M. Sullivan, Chief Counsel for Advocacy of the U.S. Small Business Administration testified before the U.S. House of Representatives Committee on Small Business telling them, "A confusing and complex tax code is at the heart of why the typical small business with fewer than 20 employees spends over $1,200 per employee to comply with tax paperwork, recordkeeping, and reporting requirements."
He was testifying about the so-called 'tax gap' of uncollected revenue from small businesses. He asserts that much of the problem is a result of "uncertainty and confusion" caused by the current system.
Sullivan testified that small business face "a regulatory compliance burden that is roughly 60 percent greater per employee than that faced by larger firms, and a tax compliance burden more than twice as large."
Sullivan concluded that the best way to fix the problem is to simplify the tax code. Sullivan has nailed the problem, but falls short on his recommendation. Every past attempt to "simplify" only created more complexity, confusion and uncertainty. They tax code is too complex to find meaningful ways to simplify. This is more evidence that we need to scrap the current tax code and start fresh with a truly fair and simple approach to taxation.
(Source: SBA Office of Advocacy)
