If our convoluted and confusing tax code doesn’t already give you a headache this time of year, now you also have to worry that your personal information could be stolen from the Internal Revenue Service (IRS). According to a White House audit released last month, the U.S. government was hit by more than 77,000 “cyber incidents” in fiscal year 2015 – a 10 percent uptick from 2014. A week later, a Government Accountability Office (GAO) report issued 43 recommendations to the IRS to correct its information security vulnerabilities.
This is further proof that comprehensive tax reform is long overdue. Kansans and Americans lost their trust in the IRS during the 2013 scandal when the IRS admitted to targeting political advocacy groups. And these latest security failures highlight why Congress should put a stop to this agency’s intrusion and why the IRS should be abolished completely.
Unfortunately, in the face of an unwilling administration, Congress has had to advance piecemeal fixes to the tax code instead of a complete and necessary overhaul. In December, Congress permanently extended a number of tax breaks including the R&D credit, restaurant and retail depreciation, and Section 179 expensing. Section 179 allows farmers, ranchers and small business owners who buy equipment to immediately expense the purchase and reduce their overall tax burden. Its permanency will result in more economic activity, more job creation, and a greater level of certainty so individuals can best decide how to spend and invest their money.
I am hopeful that in the coming year, with a new administration, Congress will have an opportunity to replace our tax code with a commonsense system that is far simpler and more growth-oriented. I believe the best approach is what is known as the FairTax – legislation (S. 155) I introduced in January 2015 with my colleague Senator David Perdue of Georgia, himself a former businessman who understands the drag our current tax code has on job growth. The FairTax would put all taxpayers on equal footing, protect Americans from government intrusion by the IRS, boost business growth, and incentivize savings and investment – all while collecting revenue at levels similar to those of our current tax code.
The FairTax would replace our complicated and costly tax system with a flat national consumption tax and eventually close the IRS altogether. It would repeal all federal personal income taxes, corporate income taxes, payroll taxes, self-employment taxes, capital gains taxes and gift and estate taxes, and instead replace those with a revenue-neutral, personal consumption tax on all retail sales of new goods and services.
The FairTax is a significant step in the direction of individual freedom, a fundamental concept of our nation’s founding. It would allow Americans to keep the entirety of their income and put individuals back in charge of their own finances rather than the government. Under the FairTax, all Americans – regardless of their economic status – would be on equal footing and achieve greater freedom. With no taxes on savings or investment, there would be more jobs and greater productivity.
As Kansans and Americans file their federal income tax returns this month, the latest mishaps and security insufficiencies at the IRS are disconcerting to say the least. Our country’s citizens should have confidence that the federal government is keeping their personal information secure, but the reality is achieving this goal will require nothing short of a complete overhaul of a broken system.