And the code becomes worse with each passing year. Since the 1986 Tax Reform Act, lawmakers have approved more than 6,000 changes. In almost every case, they have made the system more complicated. This may be good news for accountants and tax lawyers, but it is bad news for taxpayers, who are left wondering how the problem can be fixed.
One possibility is the flat tax, which would remove special loopholes for the rich and increase upward mobility for low-income Americans. Tax forms would be the size of a postcard and take about as long to fill out. Yet while a flat tax would certainly be simple and fair, its prospects during an election year are dim, to say the least.
Rep. Steve Largent, R-Okla., and Sen. Tim Hutchinson, R-Ark., think they have a solution. They have introduced legislation that would require Congress to start fresh and design a completely new tax system by July 4, 2002.
If this were all the legislation required, it could rightly be derided as a joke. After all, no Congress can bind the actions of a future Congress. But the sponsors figured out a way to ensure that their fellow lawmakers take this responsibility seriously. The legislation includes a provision to abolish the current tax code as of Dec. 31, 2002.
Talk about an ironclad enforcement provision. The last thing lawmakers want is to lose all the money they get from the income tax, so the public can be confident they will do what the law requires and create a new tax code. Ideally, that new system will be a flat tax -- but at least they can't fashion anything worse than the current mess.
There are two main arguments against this effort to "sunset" the tax code. First, why wait more than two years to fix the problem? Why not simply enact a new tax system now? But fundamental reform will not happen overnight. There are too many special interests willing to contribute money to preserve the current system. They know that tax reform would put a big dent in political corruption, since politicians would no longer be able to trade loopholes for campaign cash.
Moreover, the American people should be given time to express their opinions. If you sunset the code, you force politicians running for office in 2000 to take a stand on what type of tax system they want. Sure, the flat tax is a popular choice, but there are other options, such as a national sales tax. Some may even want to re-create the current system.
The second objection to sunsetting the tax code is that it would create too much uncertainty. How could anyone plan without knowing what the code will be like in three years? But the same thing can be said about the current system. Politicians are constantly manipulating the tax code with social engineering and back-door industrial policy.
Consider the 1997 tax bill, which created 285 new sections of tax law and amended 824 others. The law today is such a mess that even the bureaucrats do not understand it. According to a General Accounting Office study, the IRS gave incorrect answers to nearly 10 million taxpayers who phoned its toll-free hotline in 1999.
At least there is some hope that the special-interest gravy train will stop if the Largent- Hutchinson legislation is approved and a new tax system put in place. Indeed, there probably will be less uncertainty if the bill is enacted, since voters and the media will demand that both George W. Bush and Al Gore spell out what kind of tax they would favor.
In the final analysis, sunsetting the tax code is a no-lose proposition. At worst, Congress will fail to agree on a new tax code and decide to retain the current one. But with some luck, this could be the beginning of the end of the annual American tax nightmare.
Daniel Mitchell is the McKenna senior fellow in political economy at The Heritage Foundation (www.heritage.org), a Washington-based public policy research institute.