Today is Tax Day, and it is also Tax Freedom Day, the day the average American has earned enough to finally pay this year’s federal, state, and local tax bill. Compare that to the year 1900 when Tax Freedom Day fell on January 22nd. According to the Tax Foundation, unless Washington takes action, tax increases “could push Tax Freedom Day to the end of April or beyond.”

Our tax system is complex and confusing, and it discourages job growth and overall competitiveness. In order for the future of America to be stable and secure, we must address fundamental tax reform. So what does that look like? I adhere to the following simple truths when it comes to tax reform:

Our Tax Code Should Be FAIR. No American should be able to game the system to pay less than they should. We should remove lobbyist loopholes, lower rates, and promote economic growth.

Our Tax Code Should be SIMPLE. Together, individuals and businesses spend over six billion hours and 160 billion dollars every year just trying to understand and comply with the tax code. Our tax code should be clear, easy and simple.

Our Tax Code Should be COMPETITIVE. Raising taxes on job-creators and small businesses would prevent them from hiring new workers or investing at a time when we need more economic growth. Likewise, provisions in our tax system - like the death tax - discourage the American principle of working hard and passing something on to your children. Our tax code should allow businesses to compete fairly in the marketplace and reward those who play by the rules.

I have supported several solutions that would help simplify our tax code, including eliminating penalties, creating an optional flat tax, closing loopholes, and making the corporate tax rate competitive. You can read about those bills here.

Also -

• A Primer on Taxes in America compiled by my office.
• Eight out of 10 small businesses say that “regulation…from Washington make[s] it harder for their business to hire more employees.”
• Weigh in on America now having the highest statutory corporate tax rate in the world at 39.2%.
• The American Conservative Union has rated my work to lower taxes.  

“Am I taking advantage of the right deductions?”
“Am I paying too much in taxes?”
“Do secretaries really pay a higher percentage of their income in taxes than millionaires?”
“What are loopholes and how are corporations able to get away with them?”
“Will new policy changes in Washington make my business taxes go up?”

These are just a few questions that ring through the ears of Americans when they think of our federal tax system. Few of us hear the word “taxes” without automatically thinking of complexity, confusion, and frustration. Our federal tax code is a vast system of numbers, equations, deductions, credits, loopholes, forms, and publications. Beyond the federal tax code itself, there are complicated policy issues regarding taxes that need to be addressed.

I have put together this background and issue primer on taxes in America to help break down our current federal tax code and shed light on some current issues surrounding our tax system. This document does not touch on every complexity of our tax system; there are volumes of works published with the purpose of providing detailed explanations of any one of the topics addressed in this primer. However, it is my hope that this background and issue primer will provide helpful information and begin a discussion about taxes in America.

In this document, you will find:

AN OVERVIEW of the FEDERAL TAX CODE
STATE and LOCAL TAXES EXPLAINED
FEDERAL TAXES in PERSPECTIVE
WHERE I STAND
LEGISLATION I SUPPORT
RECOMMENDED READING

Click here or click the document below to read:

As we approach the looming August 2 debt ceiling deadline, Congressional leaders and the Administration have been debating courses of action necessary to address the nation’s debt.  I know many of you are watching the debt ceiling debate closely.  I want to share with you my key principles in the debt limit debate and the solutions I am supporting to get spending under control and cut, cap and balance the federal budget.

My Key Principles in the Debt Limit Debate

Cut Spending. All across America families and businesses must live within their means. The federal government should too. At a time when the federal government is borrowing 42 cents for every dollar it spends, we need significant spending cuts.

No Tax Increases. Our nation has a spending problem—not a taxing problem.  Government spending cannot be solved by raising taxes or increasing the debt limit.

Protect Those Who Serve Our Country and Their Families. It is unacceptable to threaten withholding payments to our military service members and their families during negotiations over the debt limit. Military men and women, many of whom are serving overseas, should not have to worry about whether or not they will continue to receive their well-deserved paychecks, allowing their families at home to put food on the table.

Protect Our Seniors. One of our top priorities should be to protect our nation’s seniors by preserving Medicare and Social Security.  This can be done in a responsible fiscal fashion that does not harm seniors or future generations of Americans.

Ensure Funding for the Defense of Our Nation. We must be able to provide for the common defense of our nation. We must ensure access to funds to pay for defense and national security obligations.

Pay Our Bills. We can—and must—make paying the national debt our top priority. Allowing the U.S. to default on its debts would jeopardize confidence in the U.S. government in the global market and pose risk to our economic recovery and prosperity. Any proposal to lift the debt ceiling must include a strong plan to control government spending.

So how do we make sure these principles are being met?

I’ve cosponsored the following solutions:

Balanced Budget Amendment, H.J.Res.1. This amendment would require that Congress not spend more than it receives in revenues, requires the President to submit a balanced budget to Congress, and requires a 3/5 majority vote to increase the debt limit.

Full  Faith and Credit Act, H.R. 421. This bill offers a simple safeguard to prevent default. It would ensure that the U.S. government does not default on its debt by requiring the Treasury to prioritize payments on the public debt over any other payments in the event the debt ceiling is not raised.

Social Security Preservation Act, H.R. 219. This bill ensures that Social Security funds are used only to pay Social Security benefits, preventing funds from this critical program from being diverted to other programs.

Guarantee Paychecks for America's Military Families Act, H.R. 1551. This bill would prioritize, in the event of default, the principal and interest on public debt, military personnel’s earned pay, allowances, and other compensation, and funds for defense and homeland security contingency operations above other federal obligations.

You can download all of this information in a one-pager flyer that you can then print and share with friends or family members who may share our concern over the national debt and the debt limit debate:

Click the image or click here to download the one-pager.

I’d like to know what you think. Do you agree with these principles?

On May 16, 2011, the government officially reached the debt ceiling, or the level imposed by Congress on how much national debt the U.S. can carry. Despite reaching this threshold, stronger than expected tax revenues have extended the government’s borrowing authority through August 2, 2011. The Administration cannot raise the debt ceiling without permission from Congress and so for the past several months, congressional leaders and Administration officials have conducted negotiations to determine the size and scope of spending cuts necessary for Congress to agree to lift the debt ceiling. Recently, the Associated Press reported that the Administration is seeking to not only raise the debt ceiling, but also to raise taxes on small business owners and potentially low- and middle-income families. Instead of raising taxes on those who can least afford it and on those most likely to create jobs, I remain committed to a plan that includes serious and immediate cuts in spending, institutes permanent federal spending caps, and passes a requirement for Congress to balance the federal budget by spending no more than revenues allow.

Question of the Week: Do you support the President's call to increase taxes as a way to address our national debt?

(  ) Yes.
(  ) No.
(  ) Other (share your thoughts on my blog here).
(  ) I am unsure.

Take the poll here.

Find out the results of last week's instaPoll here.

This chart, using data from the Congressional Budget Office and the White House Office of Management and Budget, shows Americans could face the highest tax burden in history.

Higher taxes would contribute to economic stagnation and  deepen the financial crisis, according to the American Legislative Exchange Council. Read about my work to ensure American families and businesses aren’t forced to carry a burden of higher taxes, especially in our current economic environment.

Are you worried about the possibility of a greater tax burden?

How much of your tax dollars goes toward payments on the national debt?  How much of your taxes are spent on entitlements?  What is your contribution to U.S. foreign aid programs?

With the national debt skyrocketing, I believe that hardworking taxpayers deserve to see itemized accounting of where their money is being spent and how much Uncle Sam is borrowing each year. 

This is why I am co-sponsoring the Taxpayer Receipt Act, which would provide an individualized receipt that shows where a taxpayer’s income taxes are spent.  Under this bill, each taxpayer who files an income tax return would receive a receipt – similar to a grocery store receipt – from the IRS that would include key categories where their dollars are being spent, such as the interest on the national debt, Social Security, Medicare, Medicaid, national defense, veterans’ benefits, environmental protection and foreign aid.  Taxpayers would be directed to a website where they could get more information on programs not included in the one-page receipt.  Additionally, the receipt would provide taxpayers with the amount representing their share of the federal debt.

This bill would provide increased transparency and accountability to the process by which the government determines where and how much to spend.  Hopefully it will also encourage lawmakers to spend less and respect taxpayer dollars more.

Each year, taxpayers and small businesses spend nearly 2.5 billion hours preparing their tax forms. Even the commissioner of the Internal Revenue Service, Douglas Shulman, has said, “I find the tax code complex, so I use a preparer.”

The complexity of the current tax system heavily burdens small businesses, impacting their effectiveness and productivity. Many small businesses cannot afford to hire accounting firms so they are forced to navigate the code alone.

We need to simplify the tax code in order to encourage the growth of small businesses. A common sense tax reform would allow companies to dedicate their time and resources to expanding their business and creating new employment opportunities rather than wasting valuable time and energy decoding the tax code.

That’s why I have cosponsored the Freedom Flat Tax Act, which creates an optional flat tax. This bill would allow an individual or businessperson to opt out of the current tax system for a flat tax of 19% for the first two years and 17% thereafter. Additionally, the optional flat tax proposal would:

• Eliminate the marriage penalty;
• Repeal the death tax;
• Abolish the Alternative Minimum Tax;
• Eliminate capital gains taxes; and
• Allow for immediate expensing of business capital equipment.

Do you think simplifying the current tax code system should be a priority in helping small businesses and boosting the economy?

The current American tax system was developed nearly a century ago at a time when the economy was largely based on agriculture, manufacturing, and local commerce.  With the onset of the information technology age, American businesses, families, and organizations have changed while the tax code has remained the same.  As a result, the American tax system has grown increasingly inefficient, outdated, unfair, and complex.

As of 2009, the U.S. tax code was 67,204 pages long with a reported 1,638 different tax forms.  The IRS estimates that a taxpayer needs about 37 hours to prepare the basic tax form, which is almost an entire work week.

At a time when unemployment has steadily hovered around 9%, I believe a common sense tax reform is necessary to eliminate the costs and burdens of the system while creating more job and business development.

Some measures I am taking to fix our outdated tax system include:

·         Cosponsoring the Tax Code Termination Act (H.R. 462), which would replace the old tax system no later than July 4, 2015.  This new system would seek to apply a low rate to all Americans, provide tax relief for working Americans, protect the rights of taxpayers and reduce tax collection abuses, eliminate the bias against savings and investment, promote economic growth and job creation, and get rid of penalties facing those married or with children;
·         Cosponsoring the Freedom Flat Tax Act (H.R. 1040), which creates an optional flat tax, allowing an individual or businessperson to opt out of the current tax system for a flat tax of 19% for the first two years and 17% thereafter;
·         Cosponsoring the Taxpayer Receipt Act (H.R. 1527), which would give each taxpayer who files an income tax return a receipt from the IRS that includes how much of their tax dollars are used for key categories, such as the interest on the national debt, Social Security, Medicare, Medicaid, national defense, veterans’ benefits, environmental protection, and foreign aid; and,
·         Cosponsoring the Death Tax Repeal Act (H.R. 177), which would permanently repeal the federal death tax and allow small business investment to rise 3% annually.

Weigh in.  Do you support these efforts that will create jobs and lessen the complexity of the American tax system?