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Thursday April 24, 2014

Washington News

Washington Hotline

Taxpayers Want 'Simplified Tax Code'

Senate Finance Committee Chair Max Baucus (D-MT) spoke to a Washington conference on June 13. He shared a number of responses from taxpayers who wrote comments on the website This site was created jointly by Baucus and House Ways and Means Committee Chair Dave Camp (R-MI).

The top request was for a "simplified tax code."

Taxpayer David from Redmond, Washington stated, "I'm a retired lawyer and I can't prepare my own tax returns because of the technical and incomprehensible language of the code."

A taxpayer named Richard from Baucus's hometown of Helena, Montana, commented about the tax code and noted, "It needs to be simple, effective and fair."

Baucus affirmed Richard and said that he had "hit the nail on the head." The current tax code is not simple, effective and fair.

Both Baucus and Camp are making plans for a July and August series of town hall meetings. Individuals will be able to attend and share their requests for the forthcoming tax reform bill.

Baucus and Camp also discussed the potential reorganization of the Internal Revenue Service. Because the IRS procedures for granting tax exempt status have been the subject of numerous hearings, Baucus stated, "There does need to be significant restructuring of the IRS."

Camp plans to hold another hearing next week with acting IRS Commissioner Danny Werful as the sole witness. Camp stated, "This looks like at best a complete management failure and at worst intentional. We just do not know that yet."

Camp and Ranking Member Sander Levin (D-MI) are still waiting for Werful to respond to their May letter requesting information on IRS procedures for granting exempt status.

Editor's Note: The tax code and regulations have increased dramatically in size and complexity since the last major reform in 1986. It will be very challenging for Baucus and Camp to actually produce a comprehensive bill that simplifies the code. If they are successful in the efforts to reduce overall tax rates, then it will be necessary to reduce itemized deductions. Changes in those deductions have historically been complicated rather than simple.

230 Economists Support Charitable Deduction

In a June 14 letter from the Alliance for Charitable Reform (ACR), 230 economists from nonprofits, colleges and universities throughout the nation explained the reasons to support the itemized charitable deduction.

ACR Executive Director Sandra Swirski made the letter public and noted, "The current charitable deduction serves as a catalyst for spurring private giving, including the valuable contribution of dedicated volunteers. The resources generated by private giving support those in need."

The focus of the letter by the economists was to emphasize the special character of the charitable deduction. The letter notes that the deduction is "unique, deserving of special treatment." It continues, "Only the charitable deduction can make this case without reservation or equivocation. It truly is unique in purpose and consequence, and should be retained in an income tax reform."

The letter focused on three principal reasons for retention of the charitable deduction even if other itemized deductions are reduced. These include the benefits to the needy, the improvement of society and the efficient nature of charitable organizations.

1. Benefit to the Needy – The charitable deduction is unique because it does not benefit the taxpayer. Rather, it facilitates assistance to unwed mothers, education, the environment and religious organizations.

2. Society – The current budget reductions are reducing the social safety net. Nonprofit organizations are replacing an essential governmental function by assisting those in need.

3. Parsimonious – The effectiveness of charitable organizations is leveraged multiple times by "dedicated, unpaid volunteers inspired to support their communities." This effectiveness of the charitable organizations is a prime reason to continue to support them through retaining the full charitable deduction.

In the recent Giving USA report for 2012, individual gifts were $218 billion. The ACR position is that it would be "illogical to tax the donor" on these gifts from the donor to individuals in need.

Published June 21, 2013

Previous Articles

Camp Opposes Charitable Deduction Cap

House Moving Forward on Tax Reform

Ireland and Apple Dispute 'Tax Haven'

Will Apple Pay Tax on $100 Billion?

Coalition Supports Charitable Tax Deduction

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