Simplifying the Entire Federal Tax System Would Help Everyone

Both taxpayers and the IRS would benefit from a simplified tax system. Taxpayer compliance would increase even as their cost of compliance decreases. Greater compliance would enable the IRS to shift resources from enforcement to service, which would increase compliance further.

It also would reduce the number of taxpayer interactions with the IRS, reducing the physical stress, time, and costs associated with those interactions. The tax gap would get smaller, increasing revenue available to address the needs of all Americans.

Simplifying the system would increase fairness. All taxpayers, regardless of size or wealth, could understand more easily how to pay only what they owe.

While tax fairness depends heavily on policymaker choices, in a simplified system, tax outcomes would be determined less by whether a taxpayer engages a tax professional and the quality of that professional. And bad actors would have fewer opportunities to exploit complexity to prey on taxpayers.

Simplifying the tax system would be a big job, but that doesn’t mean it’s not worth doing. For years, those inside and outside government have advocated for a simpler system. However, the legislative waiting room is littered with well-intentioned bills on simplification that haven’t been enacted, such as proposals to simplify the definition of a qualifying child.

Congress should commit to including at least one simplification provision in every tax bill enacted, and Treasury and the IRS should commit to including at least one simplified provision, such as a safe harbor, in every regulation published. This commitment would make simplification top of mind and move us a little closer to a more balanced federal tax system.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Rochelle Hodes is a principal in Crowe’s national tax office in Washington, D.C. She previously served in the Office of Tax Policy at the US Department of Treasury, the IRS Office of Chief Counsel, and multiple Big Four firms.

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