What policy reforms could simplify the tax code? Q.What policy reforms could simplify the tax code? A.Reducing the number of distinctions among economic activities and taxpayers’ personal characteristics would simplify the code, reducing both compliance costs for taxpayers and administrative costs for the government. The consequent broadening of the tax base would allow lower tax rates while maintaining revenue and also reduce economic distortions caused by taxation. Read more about What policy reforms could simplify the tax code?
How costly is complexity? Q.How costly is complexity? A.Tax compliance imposes three major costs: taxpayers’ time spent filing returns; their out-of-pocket costs of keeping records, hiring preparers, buying software, and the like; and government costs of administering the tax system. All of those costs increase with the complexity of the tax system, but their magnitudes are difficult to measure. Read more about How costly is complexity?
What are the benefits of simpler taxes? Q.What are the benefits of simpler taxes? A.Simpler taxes have lower compliance costs—in terms of both time and money—and may encourage taxpayers to use tax provisions aimed at helping people pay for socially desirable activities. Read more about What are the benefits of simpler taxes?
