Sunset the U.S. Tax Code

After last week’s midterm elections putting Republicans in majority control of the United States Senate and expanding the Republican majority in the House of Representatives, there’s been a lot of speculation about what their legislative priorities ought to be – and in particular, what proposals might stand a chance of getting President Obama to sign them.

It may still be a perfectly good idea to force the President’s hand to veto certain bills that would never have been even brought to a vote if Harry Reid were still Senate Majority Leader, such as full and partial repeal bills for ObamaCare, but if Republicans want to earn the support and respect of the American public at large, they need to do more than just pass bills that the President will veto. They need to engage in a kind of big-picture creative thinking that we haven’t seen since the days of Ronald Reagan. The one really big agenda item that the President and the Republican leaders have both mentioned in the days after the election is reforming the tax code – although those mentions have been vague indeed. I want to suggest an even larger, yet simpler, legislative agenda item: sunset the entire tax code on January 1, 2020. 

Why should we scrap the existing tax code? First, it is ridiculously complex. The reference “bible” used by many practitioners to understand the code and its application is the version from legal publisher Commerce Clearing House. It’s 73,954 pages in all. The pure code itself in small print from the Government Printing Office is a “mere” 2,652 pages. No one can really understand all of it.

Second, there’s wide public support. A stunning 93% of the respondents in a 2012 Gallup survey of national priorities consider it “important” to “simplify the tax code to lower rates and eliminate deductions and loopholes.” Several other polls have also shown wide support for tax reform.

Finally, it’s politically viable: another survey this year revealed that over 76 percent of voters will be more likely to favor a candidate who supports comprehensive tax reform. 

One effort in the overall direction of tax reform that has caught fire recently is the movement to abolish the IRS. There are more than 20 variations of “Abolish the IRS” bumper stickers available online. That simple theme obviously resonates with the public, but it cannot be described as a serious policy proposal. 

Yet as wide as the support for abolishing the agency is, the support for what system of taxation should replace the current tax code is bitterly divided between flat tax and consumption tax proponents. The special interest lobbies will defend their own turfs like cornered rats, so in the absence of consensus, any effort towards true tax simplification is bound to bog down and most likely result in a series of minor tweaks that could actually result in making the whole code even more complex at the end of the “reform” process.

So here’s an alternative proposal: Simply “sunset” (or legislatively terminate) the tax code itself, in full, at some date certain, far enough in the future to permit the creation of its replacement in a thoughtful manner. Public and political support for this interim proposal should be huge. Setting such a date will create an urgency to get it done on time, but not a crisis. When? Why not January 1, 2020? It’s far enough into the future to quell any arguments that terminating the tax code would create immediate chaos, and it has the added symbolic value of being “visionary,” “clear sighted” and “focused” because it plays on the pun of 20/20 vision.

Politically, it should unite conservatives and libertarians, and even some progressives, while putting defenders of the current system in the unenviable position of trying to speak in favor of a system that not even its most experienced practitioners truly understands. In short, I contend that this proposal can advance the tax reform agenda faster than anything else yet presented. Sunsetting the tax code is the necessary precondition to meaningful tax reform.

Colin Hanna is President of Let Freedom Ring USA, Inc., a non-profit public policy organization committed to promoting Constitutional government, free enterprise and traditional values.