Sens. Ron Wyden and Judd Gregg introduced what could be the most significant piece of tax reform in 25 years: the Bipartisan Tax Fairness and Simplification Act of 2010. It dramatically streamlines the tax system, eliminates key deductions, and -- crucially for taxpayers -- invites the IRS to prepare easy-to-understand tax returns for payers to read and sign.
I spoke with Roberton Williams, a senior fellow with the Tax Policy Center about the bill. He likes it, a lot. His first reason for liking it a lot is that it makes tax returns so easy that most taxpayers will be able to request the IRS to send them a one-page form to review and sign rather than go through tax preparer services.
But what does that mean for the H&R Blocks of the world? Williams explains:
What do you like most about this bill?
The whole idea of simplifying the tax system makes a lot of sense. A lot of people don't understand how the tax system works. They're worried about other people finding benefits they're not finding. If you can simplify it, you can get away from those problems.
The IRS knows everything they need to know for most tax papers. They know your income from the W-2 and 1099. They know your mortgage interest. Presumably they know the charitable organizations that you give money to, because those organizations could report the amounts. If you put money into a 401k or IRA, a bank can report that. That' s most of what you need. The information comes to the IRS. Most of us do have straightforward tax returns. The IRS can do that. That would take a big load off of people. As simple as it is, people should be able to look at a simple tax form and say: "Yep, that's what I earned. That's what I give to charities." It takes a lot of pressure off people.