The IRS has received a lot of bad press about bonuses and lost emails, among other things. Congress has made some moves in the direction of reforming the IRS and the tax code. Tax attorney Rob Wood discusses what is happening in this report and in his Forbes article “Congress Moves To Reform The IRS.”
Wood says that much of the discussion has to do with reforming the tax laws. He opines that most of the measures under consideration will probably not pass through Congress. But there are some measures under consideration that would change how the IRS does business. Wood suggests that several of the proposals are more political than anything else.
There have been a number of discussions about a flat tax of some kind, and Wood supports this approach. “The system is really moribund. It is a snarl of complexity.” Wood says that the tax laws are so complex that no one person can probably understand them all. Businesses and individuals get trapped by the byzantine provisions of the law, and even tax professionals sometimes get it wrong.
Wood mentioned Herman Cain’s 9-9-9 proposal as perhaps a move in the right direction. A plan like the Cain plan might help eliminate problems like corporate inversions, which have been in the news so much lately. Cain’s plan drew some opposition because of its inclusion of a federal sales tax. Wood points out that a plan like Cain’s could provide some breaks for low-income taxpayers such that they might actually pay less in total taxes than they are paying under our current system. The tax on the upper incomes could be less than 20% and still produce appreciable revenue.
Wood says that politics and a very divided Congress make it unlikely that reform will occur in the foreseeable future.
For more information on the subject, please refer to Mr. Wood’s article in Forbes. Robert Wood is a tax attorney with Wood, LLP in San Francisco, California and spoke with The Tax Law Channel, an affiliate of The Legal Broadcast Network. The Legal Broadcast Network is a featured network of the Sequence Media Group.