They would likely raise the use of tax subsidies-say, for education-reduce unintentional tax evasion, and increase the likelihood that taxpayers would see the tax system as fair. They would reduce taxpayers’ costs of complying with the tax system in terms of time, money, and mental anguish. This suggests that pleas for simplification need to be buttressed by an understanding of the causes of complexity and the likely outcome of simplification efforts. The fundamental paradox of tax simplification is that, although everyone thinks taxes should be simpler, almost every year tax policy becomes more complex. The notion that taxes should be simpler is one of the very few propositions in tax policy that generates universal agreement.
The first provides a summary of my principal conclusions the second provides the economic analysis that supports these views. My testimony is divided into two sections. Thank you for providing me with the opportunity to present my views on issues and options related to simplification of the tax code.
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