[Congressional Record Volume 163, Number 167 (Tuesday, October 17, 2017)]
[Senate]
[Pages S6464-S6465]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. FLAKE:
  S. 1974. A bill to require transparency in the tax code by requiring 
federally funded tax credits to be disclosed in the USASpending.gov 
website; to the Committee on Finance.
  Mr. FLAKE. Mr. President, I rise to speak on the much needed topic of 
tax reform. The high rates and complicated nature of the current Tax 
Code are burdening individual taxpayers and making businesses less 
competitive in the global market. That simply has to change. It has 
been more than 30 years since we have passed major tax reform, and we 
are well past time.
  Unfortunately, I recently learned of a serious threat to reforming 
the Tax Code called alpacas. Now, what do these cute, mild-mannered 
pets have to do with Federal tax policy? Earlier this year, I issued an 
oversight report entitled ``Tax Rackets: Outlandish Loopholes to Lower 
Tax Liabilities.'' That report demonstrated how clever accounting 
allows nearly anything imaginable to become a writeoff, including 
alpacas.
  To illustrate the point, the report outlined how local and Federal 
tax bills can be sheared by claiming exotic pets--these exotic pets--as 
livestock and turning backyards into barnyards. That is when the fur 
really started to fly.
  Alpaca owners associations that once brazenly touted this tax fleece 
as a key selling point for the animals now feigned outrage at the 
suggestion. The association tried to pull the wool over the eyes of 
taxpayers by retaining a professional PR consultant. They launched a 
media campaign, inundating my office and others with phone calls, 
social media messages, and letters with photos of alpacas.
  Through slick reporting and aggressive lobbying, tax-subsidized 
alpaca ownership was somehow presented as a bulwark of small business 
and a flourishing middle class. If this mere mention of a tax break 
costing $10 million annually and enjoyed by relatively few taxpayers 
elicited such an outmeasured and aggressive response, imagine the 
backlash we will face when we are attempting to actually eliminate tax 
preferences benefiting powerful corporations and special interests to 
the tune of billions of dollars.
  There are over 200 loopholes buried throughout the Tax Code that 
collectively cost $123 trillion annually. Again, there are over 200 
loopholes buried throughout the Tax Code that collectively cost $1.23 
trillion annually. This exceeds the total amount spent annually by the 
Federal Government for all discretionary programs, which includes 
defense, education, transportation, foreign aid, and protecting the 
environment.
  These exemptions increase the bill for the average taxpayer. They 
also make the Tax Code so complicated that most individuals have to 
hire a tax professional or buy software to help complete their tax 
returns.
  At more than 74,000 pages in length, no one--not even those in 
Washington who write the laws or enforce them--truly understands 
Federal tax law. Special interests are taking advantage of this 
confusion by hiring armies of accountants and Washington lobbyists to 
dodge taxes and cash in on the complexity of the code. For example, 
developers are claiming--these are a lot of homebuilders are claiming 
$8 billion in tax credits every year supposedly to construct low-income 
housing, but with fewer homes being built and no basic accountability 
requirements, it is nearly impossible to track how this money is being 
spent.
  The Government Accountability Office, the GAO, which is 
investigating, said the ``IRS and no one else in the federal government 
really has an idea of what is going on.''
  The same is true with hundreds of other tax loopholes. A luxury yacht 
can qualify as a second home and can be eligible for a mortgage 
interest deduction. Alaskan ship captains can expense costs for whaling 
as charitable contributions, even though no money goes to charity and 
whaling is typically illegal otherwise. High rollers can itemize the 
cost of gambling trips, including entertainment. Even the cost of 
losing lottery tickets can be deducted, a kind of scratch-off writeoff.
  Only the IRS knows who is taking advantage of these loopholes, and 
the agency often cannot verify whether those claiming the tax giveaways 
are eligible. In order to achieve meaningful tax reform that makes the 
code simpler and fairer, we have to be able to first evaluate who is 
benefiting from these loopholes, for what purpose, and for what price.
  That is why I am introducing the Tax Expenditures Accountability Act, 
which will publicly disclose the names of the corporate and special 
interests receiving tax credits and the costs of these tax credits. 
This bill requires the Department of Treasury to disclose the special 
interest receiving tax credits just as all other Federal expenditures 
are currently disclosed on the public website USAspending.gov. Sunlight 
is obviously the best disinfectant, and I look forward to exposing many 
of these loopholes, eliminating them, and returning the savings to 
individual taxpayers in the form of lower taxes.
  As the alpaca lobby demonstrated, riding herd on tax breaks will 
cause every special interest benefiting from the code's complexity and 
unfairness to cry foul. Washington's powerful special interests will 
mobilize and threaten to derail tax reform. Many would rather protect 
these loopholes than allow taxpayers to keep more of their own 
paycheck.

[[Page S6465]]

  Coming up short on reform is not an option. We have to do it this 
year. Individuals and businesses are suffering under a broken, 
antiquated tax code that is in dire need of fixing. We can't be 
deterred in efforts to achieve real reform that reduces the tax bill 
for everyone.
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