Belmont University

Beware of Trojan Horses

The House Committee on Small Business is talking about using the tax code to stimulate small businesses the economy. From their news release (via beSpacific and Ben Cunningham):

Times change and so should the tax code, but with tax day less than a week away millions of entrepreneurs are facing outdated IRS provisions that stifle their ability to boost the economy. Today, the House Committee on Small Business heard from a panel of business owners and tax experts at a hearing focused on modernizing sections of the code while making it more small business friendly. As part of the forum, the Committee also issued a report titled "Seven Ways to Stimulate the Economy by Updating the Internal Revenue Code," which provides specific recommendations on fixing provisions that impact small firms.

What they are proposing is what is euphemistically known as tax reform. However, note the following graph:

Tax Code Chart

See the spike in the number of pages in the tax code after the early 1980s? That's what happened after the Reagan "tax reform". The tax code actually got much more complicated when they sold it as a "tax simplification."

Finding seven ways to tweak the current code will do nothing to help small businesses in the economy. Pulling the current tax code out by the roots and starting fresh with a sales-based federal tax that is protected from special interest meddling will. Small businesses spends over $1,300 per employee just on tax compliance under the current system.

Beware of the Trojan horse called "tax reform." It will only make things worse.


Posted by Jeff Cornwall on April 11, 2008 01:24 PM |

Comments

To clarify... The tax code was reformed (simplified) in 1986. It's not represented in your graph above, but the number of pages went down. One of the big reasons for the spike in pages, was because of the attempt at simplification, Congress had now created thousands of loopholes for taxpayers. Closing loopholes means additional regulations and IRS rulings, which means more pages. To be fair, there is also a lot of pork and unneeded tax law in that pile that was created by Congress.

Birdied by: JNW | April 12, 2008 08:37 AM

I was not accusing Reagan of being disingenuous. It is just that the current income tax system is fatally flawed. When we open the door for change, even under the banner of simplification, it only creates more openings for mischief, as you point out.

Birdied by: Jeff | April 12, 2008 05:09 PM

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