[Congressional Record Volume 145, Number 68 (Wednesday, May 12, 1999)]
[Extensions of Remarks]
[Pages E943-E944]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              TAX SIMPLIFICATION AND BURDEN REDUCTION ACT

                                 ______
                                 

                           HON. AMO HOUGHTON

                              of new york

                    in the house of representatives

                        Wednesday, May 12, 1999

  Mr. HOUGHTON. Mr. Speaker, Congress can take great pride in changes 
we have made in tax law in recent years for small businesses, families 
and middle income Americans. Unfortunately, we cannot claim to have 
reduced the complexity of the tax code. A simple Constitutional 
amendment ratified in 1913 runs to 32 words: ``The Congress shall have 
the power to lay and collect taxes on incomes, from whatever source 
derived, without apportionment among the several States, and without 
regard to any census or enumeration.'' The Revenue Act of 1913 which 
enacted the income tax was 15 pages long.
  The copy of the Internal Revenue Code on the bookshelf in my office 
is printed on the tissue thin paper. It covers over 2300 pages. The 
regulations springing from the code fill many volumes. The court cases 
would fill a library.
  Is it any wonder that 66 percent of respondents in a recent 
Associated Press poll said that the federal tax system is too 
complicated? The same poll showed that over half of those surveyed, 56 
percent, pay someone else to complete their returns. When you consider 
that only 30 percent of taxpayers itemize, that is a good number of 
people who are paying someone else to fill out 1040s and 1040EZs. 
Something is wrong when so many taxpayers with relatively 
straightforward returns lack confidence in their ability to fill out a 
1040 or a 1040EZ.
  At the beginning of this year, the Ways and Means Subcommittee on 
Oversight heard from the Taxpayer Advocate in its first hearing of the 
106th Congress. The Advocate presented some 39 legislative proposals 
for improving service or reducing the compliance burden. He told us 
that his recommendations came from a ``groundswell of casework.''
  Later this month, the Oversight Subcommittee will hold a hearing on 
the need to simplify the tax code and reduce the compliance burden. I 
look forward to hearing from Treasury and from several professional 
organizations, also from practitioners who work in the field every day 
trying to help working men and women comply with our tax laws.
  In the meantime, I am in the process of drafting legislation (The Tax 
Simplification and Burden Reduction Act). It includes several of the 
Advocate's recommendations, proposals developed by the Tax Section of 
the American Bar Association and the American Institute of Certified 
Public Accountants, also suggestions I have received from the people of 
New York's 31st Congressional District and from people across the 
United States who have written to the Subcommittee on Oversight.
  My bill would include the following provisions:
  Eliminate nonrefundable credits as adjustments to regular taxable 
income in calculating alternative minimum taxable income. No one should 
have to pay the alternative minimum tax (AMT) simply because he or she 
claimed a child credit or HOPE scholarship credit.
  Exempt taxpayers from the AMT if their modified adjusted gross income 
is below a middle-income threshold ($85,000 for individuals, $120,000 
for married, filing jointly). The AMT was never intended to penalize 
middle-income taxpayers who aren't using loopholes in the tax code.
  Increase the AMT gross receipts exemption for small businesses from 
$7,500,000 to $10,000,000. By the same token, the AMT is an unnecessary 
and extraordinary burden for many small businesses.
  Replace the current individual capital gains tax regime with a simple 
50 percent deduction from gross income. The current form is 54 lines 
long and according to the Treasury Department takes an average of 6 
hours and 41 minutes to complete. Many taxpayers have to

[[Page E944]]

fill out this form simply because they earned a few dollars from a 
mutual fund. The 50 percent calculation would completely eliminate this 
burden.
  Allow a deduction for all refinancing mortgage points for personal 
residences in the year paid. It is simply too confusing to require 
these relatively small amounts to be amortized over the life of a long-
term mortgage.
  Increase the exclusion for group-term life insurance purchased for 
employees from $50,000 to $100,000. Taking modest life insurance 
coverage into income is a needless inconvenience for many taxpayers.
  Repeal the percent limitation on contributions to defined 
contribution retirement plans. The current law restriction is not only 
confusing, it limits the ability of lower income workers to save for 
retirement.
  Simplify the safe harbor for payment of estimated income taxes. Under 
current law, the safe harbor changes from year to year. My bill would 
eliminate the fluctuation.
  Allow expensing of off-the-shelf computer software by small 
businesses. Depreciating such small investments is hardly cost-
effective considering the compliance burden for the taxpayer.
  Allow expensing of personal property (e.g. carpeting, refrigerators, 
washers) purchased for use in connection with residential rentals. this 
would eliminate a common error and result in increased compliance.
  Simplify Subchapter S rules. The Subchapter S regime has become a 
maze of complex requirements and a snare for even the most experienced 
taxpayers. A major overhaul is needed.
  Increase the gross receipts threshold for the cash method of 
accounting from $5,000,000 to $10,000,000. We are forcing far too many 
small businesses to use the accrual method of accounting.
  Extend the $10,000,000 gross receipts threshold for the uniform 
capitalization (UNICAP) rules to all small business activity. 
Compliance with the UNICAP rules is particularly complex if not 
impossible for small businesses.
  Reduce recordkeeping requirements. Under current law taxpayers are 
required to keep indefinitely all records that may become material. The 
bill would require taxpayers to keep only primary records after six 
years if there is no audit in progress.
  Increase from $10 to $25 the threshold for dividend and interest 
payments that must be reported on form 1099. Requiring savings 
institutions and other payors to report such minimal amounts is an 
inefficient use of private sector resources.
  Treat the postmark date as the filing date on all returns. Under 
current law, the postmark date is material only when the return is 
filed on time. Considering the postmark date as the filing date for all 
returns would eliminate confusion.
  Mr. Speaker, several of my colleagues, including the gentleman from 
Pennsylvania (Mr. Coyne) and the gentleman from Massachusetts (Mr. 
Neal), both of whom serve on the Oversight Subcommittee, have 
introduced simplification bills of their own. My immediate predecessor, 
the gentlelady from Connecticut (Mrs. Johnson), established a 
compelling hearing record when she chaired the Subcommittee. I applaud 
their efforts and look forward to working with them on this tremendous 
important challenge.
  In the coming days, I will be approaching my colleagues to ask them 
to join me as original co-sponsors of the Tax Simplification and Burden 
Reduction Act.

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