Rob Portman, November 22, 2002

No one enjoys filing their federal income tax returns. For one thing, it’s difficult to part with hard-earned money, especially if you’re trying to take care of a family or if you’re a senior citizen trying to make ends meet. But another reason everyone dreads filing their tax returns is that it is nearly impossible to make sense of our current tax code. Taxpayers are greeted by a maze of tax rules and regulations and a mountain of forms that are even difficult for professional accountants to figure out.

In this past Congress, members of the House and Senate focused on delivering much-needed tax relief to the American people. While we should continue examining ways to deliver tax relief where it is needed, I believe Congress also needs to focus this coming session on ways to simplify the tax code. That is why earlier this year, I introduced the Tax Simplification Act, legislation designed to restore some common-sense to our tax code. The bill will remove many of the unnecessary portions of the tax code and will clarify other portions that are too complicated.

Many taxpayers may have never heard about the Alternative Minimum Tax (AMT), but that will soon change. While the AMT was designed to ensure that high-income taxpayers paid a certain amount of taxes, it is increasingly falling on middle-income taxpayers. Last year, some individuals with incomes below $50,000 were required to pay AMT, and as many as 35.5 million taxpayers may be subject to AMT by 2010.

The AMT is ridiculous because it is punishing middle-income taxpayers who are using legitimate deductions. I heard from one mother of five who earns $45,000 and had to pay $1,850 in AMT due to her number of personal exemptions. And the AMT doesn’t just shoulder taxpayers with extra expenses, it is also amazingly complicated to figure out. It requires taxpayers to fill out a 13-line worksheet just to see if they are liable for AMT. Then, they must fill out a 54-line form to calculate how much they owe. The IRS estimates that a taxpayer may need almost 12 hours just to deal with the AMT. For these reasons, my Tax Simplification Act will completely eliminate the AMT and spare taxpayers this unnecessary headache.

Most people can define what a "child" is, but our current tax code defines "child" in five different ways. Likewise, it has nine different definitions for "higher education expenses." These various definitions just add to the time and frustration that taxpayers must expend on their calculations. To make things easier, my tax simplification bill would creation one uniform definition for "child" and for "higher education expenses."

Our current tax code is also loaded with provisions that make life difficult for small investors. Any investor that makes money on their investments is subject to the capital gains tax – one of the most confusing sections of the code. Depending on what kind of asset a taxpayer has and how long they’ve held onto it, they will be subject to one of 17 different rates. So my tax simplification bill would simplify capital gains calculations by adopting a uniform percentage deduction in lieu of multiple tax rates. And my legislation would also exempt the first $500 of dividend or interest income from tax. This means that small savers – who may only have a small savings account at the local bank – would be spared from having to file additional schedules. This will allow millions of taxpayers, who now must itemize their deductions, to use the simpler 1040-EZ form.

In addition to these provisions, the Tax Simplification Act would also take other steps to simplify our tax code. For example, it would completely remove over 90 provisions that are irrelevant or out of date. American taxpayers have been saddled with a tax code that too often escapes comprehension. Fifty-five percent of American taxpayers are now forced to use professional tax preparers, and Americans spend an estimated $70 billion to $125 billion per year just trying to comply with the code. The time has come to make paying your taxes less painful.

Congressman Rob Portman represents Ohio's Second Congressional District in the U.S. House of Representatives.