The first example of bad news regarding taxation is that Congress still has not had the courage to make the 2003 rate cuts on income, capital gains and dividends permanent, and they haven’t permanently repealed the estate tax. As noted above, the 2003 tax rate cuts are responsible for the stable and growing economy. Yet Republican leadership in the House and Senate continues to face unwavering opposition to further tax rate cuts from Democrats and even some Republicans who continue the class-warfare claim that low taxes somehow hurt the poor and middle-class. They repeat this lie despite the fact that two million jobs were created in 2005, and virtually every American who wants a job can find one.    

Another story of bad news is that the income tax code becomes more complex each year. Our income tax code is so complicated that many tax-preparation professionals cannot accurately file tax forms. A March 2006 story in USA Today indicated that 29 companies this year have already admitted to accounting mistakes on their tax forms, including the tax preparation firm H&R Block. H&R Block was forced to restate earnings after underestimating its fiscal year 2004 and 2005 earnings by $32 million.

An April Wall Street Journal story reported that tax preparation firms are also failing to accurately complete their clients’ tax returns. The Government Accountability Office (GAO) found that 10 of 19 commercial tax preparation outlets failed to report all income supplied by undercover GAO investigators, and some neglected to claim all the deductions available. What was the Senate’s response to the GAO findings? Instead of getting to work on creating a tax code that even the professionals can decipher, the Senate held hearings that will likely result in more regulations on the tax preparation industry. This will only mean more complexity and costs passed on to taxpayers.

The bottom line is that the income tax code is a disaster. More regulations and tinkering with deductions, credits and income brackets will only make the disaster worse. The slam-dunk fix for the income tax code mess is to completely replace it with the FairTax.

Stop the madness.