John Boehner, April 15, 2005

Every year an organization called The Tax Foundation releases data showing when "Tax Freedom Day" will be for most Americans. Generally speaking, this is the day by which the average American has worked enough to pay for all local, state, and federal taxes for the year. In 2005 the national "Tax Freedom Day" fell on April 17. In some states it was even later.

Think about that for a second. For more than a quarter of the year every nickel earned by workers is eaten up by income taxes, sales and excise taxes, property taxes, and all other kinds of taxes and surcharges. All told, the average American spends more on taxes than on food, clothing, and medical care.

Worse yet is the amount of time we spend simply preparing to give our money to the government. It’s estimated that Americans spent 6.6 billion hours this year on tax-related paperwork. That’s 6.6 billion hours of work drained from the economy, of family time drained from the home. Americans have better things to do with their time, not to mention their money. It costs an estimated $200 billion just to figure out how much we have to pay every year.

Our current tax code is so cumbersome and so complex that nobody can really navigate it. A study was conducted a couple of years ago in which three major accounting firms were given absolutely identical data upon which they were to file returns for a business. Despite having the same information, all three firms came up with different income tax liabilities. When even the experts themselves can't be sure, it's easy to see why so many Americans are frustrated with and distrust our tax laws.

At the same time, the tax code encourages debt and spending, and penalizes the savings and investment we need to create new industries and jobs for our economy. Take the Death Tax for example, which the House of Representatives recently voted to repeal. Because it affects mostly individuals who own small businesses or family farms, the Death Tax punishes thrift and encourages large capital expenditures that may or may not be of any worth. The Joint Economic Committee noted in June 2003 the high compliance costs of the tax -- specifically -- that "for every $1 removed from the economy to pay [death] taxes, another $1 is wasted in order to comply with or legally avoid the tax."

And for the record, the Federal Death Tax form, Form 706, is a 40-page document (Form 706 comes with 30 pages of instructions). Based on the Paperwork Reduction Act Notice printed on Form 706’s instructions, it would take almost an entire 40-hour work week to complete a Death Tax return.

Many of us in Congress have long pressed for bold changes to the tax code, and now, it looks like there might be reason for hope. In January the President created an Advisory Panel on Federal Tax Reform. The nine-member panel is set to unveil its proposals this summer. The co-chairmen, former Sen. John Breaux (D - LA.) and former Sen. Connie Mack (R - FL), have both agreed that all options are on the table, including the possibility of a national sales tax or a flat tax on income.

Either proposal would make it far easier for Americans to quantify how much they’re paying the federal government to do what it does. Under a national sales tax, you’d be able to see the amount government costs with each retail purchase you make. And since a flat tax would come right off the top of your annual income, it too would be easy to identify.

The compliance costs would be far easier under either system, too. In the case of the flat tax it could be as easy as a single card mailed out to every worker. You’d write down a few pieces of information, your total income for the year, and from that you’d know exactly what you owe. With a national sales tax, individuals theoretically wouldn’t have to fill out any particular paperwork whatsoever.

It’s apparent that we need a simpler tax code --- one that is fairer, more efficient, and that people trust. And we need one that provides greater incentives for savings and investment so that today's entrepreneurs will be able to create the industries and jobs of tomorrow.

For all of the positive tax changes that have become law in the last few years, we should hope for something much bigger from the president’s advisory panel. I look forward to a time when April 15 is just another day, and when "Tax Freedom Day" comes much earlier in the year for everybody.

Congressman John Boehner, a Republican, represents Ohio's Eighth Congressional District, which includes Miami, Butler, Preble, Darke, and Mercer Counties.