All blog posts related to the issue: Taxes
  • 10 Ways the Tax System is Unfair to Middle-Class Americans

    On Tax Day, Ron calls for comprehensive tax reform that works for all Americans. Here are just ten ways the broken tax code hurts middle-class families:

    1. Unfair tax treatment of wage income vs. wealth

    Taxes on wealth, such as capital gains, are often subject to a lower tax rate than wages and salaries, which the vast majority of every day Oregonians rely on for most of their income. A fair tax system would narrow the disparity between tax rates on income from wealth and income from work

    2. The tax code is too complex. 

    Without access to expensive financial planners, many families aren’t event aware of the tax credits they could take advantage of hidden in the 74,608 page tax code.  Students from Oregon, like Eugene’s Amber Lee, miss out on tax breaks to help with the costs of higher education.

    3. It takes Americans far too much time to complete their taxes.  

    Everyone deserves their April back!  It shouldn’t take U.S. taxpayers 6.1 billion hours and $168 billion per year to file their taxes.

    4. Small, family businesses are forced to navigate confusing rules and requirements.  

    According to the National Small Business Association, 40% of small businesses reported spending more than 80 hours a year dealing with federal taxes in 2014. Businesses in Oregon and across the country should be using this time to grow their businesses, not figuring out their taxes.

    5. Upside-down retirement tax breaks. 

    Our tax code makes it harder for typical Americans to save for retirement as incentives for retirement saving benefit high-income families far more than middle- and low-income families.  According to the Congressional Budget Office, only 16% of retirement tax benefits go to the bottom 60% of U.S. households by income.

    6. Those who ask for help from the IRS often can’t even get it. 

    It’s middle and low-income Americans who cannot afford expensive accountants that rely on the IRS for tax help. Customer service has declined in recent years due to budget cuts, so much that calling the IRS is like shouting into a void. Only 4 in 10 U.S. taxpayers calling into the IRS for help can get through to a real person. IRS budget cuts have led to inadequate service meaning billions in taxpayer dollars go uncollected every year. Many well-off taxpayers know this and have little fear of getting audited.

    7. Scams, fraud and identity theft are on the rise

    According to the Federal Trade Commission the #1 complaint they receive is tax-related identity theft.   In 2013 43% of all identify theft complaints to the FCC were tax related, up from 15% in 2010.  

    8. The well-off are gaming the system through offshore tax avoidance. 

    Billions of dollars are being hidden in undisclosed off-shore accounts, leaving taxpayers and small business to foot the bill Last year alone the Treasury and state governments lost nearly $110 billion in tax revenues through offshore tax havens. 

    9. No basic standards for tax-return preparers. 

    Without basic standards, too many unaffiliated tax-return preparers are incompetent or even unethical, giving taxpayers incorrect advice and potentially depriving them of their refund – something that many Oregon families depend on. Senators Wyden and Cardin are fighting to set basic standards that tax-preparers must meetLearn more here.

    10. The tax code is filled with loopholes that encourage the use of complicated financial products to lower the tax burden on investments. 

    Earlier this year Senator Wyden released a report detailing a number of these strategies. Once identified, these loopholes must be sealed shut.

  • Bipartisan, Comprehensive Tax Reform Will Restore America’s Competitive Edge

    (Note: This column was originally published in Tax Watch — Spring, 2012)

    What does this mean? It means that instead of investing in new jobs and innovation, U.S. businesses are investing time, energy and resources to avoid paying taxes. It

    means that instead of hiring people to build things, businesses are hiring lobbyists to secure more specialized tax breaks and loopholes to lower their tax burden. It means that the tax code is now so complicated that instead of making it easy for businesses to set up shop, the U.S. tax code requires every entrepreneur to have an accountant. And it means that instead of encouraging investment in the U.S., the U.S. tax code is encouraging U.S. companies to invest in other countries where taxes are lower.

    The U.S. tax code is clearly in need of reform.

    It’s been done before. In 1986, a Democratic House majority joined forces with President Ronald Reagan and a Republican-led Senate to overhaul the federal tax code. There was no precedent for that coalition, but there is one today.

    Joining forces against special interests, Democrats and Republicans sent the president sweeping bipartisan legislation that eliminated numerous tax breaks and loopholes to streamline the code and hold down rates for everyone, without any additional government spending.

    More than 6.3 million new jobs were created in just the two years that followed the ’86 reform. That is more than double the number of jobs created during the full eight years that followed the Bush tax cuts of 2001.

    Senator Dan Coats, a Republican from Indiana, and I have offered reform legislation modeled on the 1986 effort that we believe can make U.S. businesses more competitive with their global counterparts and encourage investment in U.S. workers. We have been working together to advance the Bipartisan Tax Fairness and Simplification Act and with the budget crisis throwing into sharp relief the pitfalls associated with other remedies in Washington, we believe the time is ripe for the same kind of bipartisan, comprehensive tax reform we saw almost three decades ago.

    What became clear from the 1986 effort was that lower marginal tax rates—the tax rate on the last dollar of income earned—did more for the economy as a whole than special tax provisions or sweetheart deals.

    Our bill wipes out dozens of these giveaways and lowers the corporate tax rate for everyone, from a global high of 35 percent down to a competitive 24 percent. That will boost American businesses’ ability to compete, plain and simple.

    The Wyden-Coats bill eliminates the tax break for shipping jobs overseas but gives U.S. corporations a one-time tax holiday to repatriate profits currently held offshore, helping them transition to the new tax system. In addition to the low flat corporate rate, this will help make the U.S. a more attractive place for both U.S. and foreign businesses to invest.

    But tax reform can’t stop with the corporate tax code.

    The vast majority of American businesses pay taxes under the rules of the individual code so corporate tax reform alone will do nothing for the thousands of sole proprietorships, partnerships, and LLCs that make up the backbone of the U.S. economy. We need comprehensive tax reform that simplifies the corporate and the individual code at the same time so that no U.S. business or taxpayer is left out.

    Tax reform can create a simpler, more business-friendly tax code that increases tax revenue without raising tax rates. It can lower corporate tax rates to make American businesses more competitive, which will help businesses to create jobs that pay middle class wages. Tax reform can also make tax filing less taxing for everyone.

    None of this is going to be easy. When the drum beat for reform picks up, every special interest and lobbying firm in the city will be working overtime to protect the tax breaks they hold dear. But if Congress is serious about creating jobs, there is no better place to start than tax reform.