We all know the tax code is unfair and far too complicated. The statutory corporate tax rate is 35%, but it seems like every few months there’s a new report on big corporations working the system. One recent report showed that, of the big corporations in the S&P 500, 115 paid less than 20% in taxes. Another report claimed that, of 280 of the biggest corporations in the country, 78 paid nothing in taxes during one of the last three years. How is this possible? An army of lobbyists helps create tax loopholes, and an army of lawyers helps these companies take advantage of them – and it’s all perfectly legal. What does that mean for the rest of us? Small businesses are at a competitive disadvantage.
We need serious tax reform to make the tax code fairer and simpler.
Sen. Elizabeth Warren, D-Mass., is to introduce a bill Wednesday that would change filing procedures in coming years and hit major for-profit tax filing industry players.
Warren’s bill, the Tax Filing Simplification Act of 2016, seeks to establish a free online tax preparation and filing service that would give citizens access to tax return information provided by third parties like employers and allow them to file directly file with the federal government.
The bill’s supporters argue that no one would have supported a system 30 years ago where paper returns were available only through for-profit companies.
“No citizen should have to pay for the software necessary to file taxes, nor should they be required to go through an industry middleman to get their forms to the IRS,” the letter said.
“The government already receives nearly all of the information it asks salaried taxpayers to provide. This includes wage, interest, dividends and property and stock sales data,” the letter said. “The Tax Filing Simplification Act allows taxpayers and their preparers to access this information.”
The co-sponsors of Warren’s bill include Democratic presidential candidate Sen. Bernie Sanders of Vermont, along with Democratic Sens. Sheldon Whitehouse of Rhode Island, Tom Udall of New Mexico, Jeanne Shaheen of New Hampshire, Al Franken of Minnesota, Tammy Baldwin of Wisconsin and Edward Markey of Massachusetts.