Federal tax code must get simpler
It's tax season again and many Kansans and Kansas businesses are busy preparing to meet Monday's deadline.
I know the tax code can be complex. There are a number of resources to help you cut through the red tape this tax season including the IRS Web site at www.irs.gov. Here you can find tax forms, answers to frequently asked questions and you can check the status of your refund if one is due.
I have long supported efforts to reduce the tax burden on Kansans and reform the tax code to make it fairer and simpler. Over the past few years, Congress has approved several tax relief measures, which I supported, to help grow the economy and reduce the tax burden on individuals and families.
This relief includes reductions in the marginal income tax rates, the creation of a new 10 percent income tax bracket and lower tax rates on capital gains and dividend income. Congress also raised and extended the child tax credit from $500 to $1,000 and provided tax relief for married couples.
This year, Congress is considering legislation to extend several tax relief provisions, including the research and development tax credit for businesses, the deduction for out-of-pocket classroom expenses incurred by teachers and the deduction for qualified higher education expenses. This legislation also extends the increased expensing for small businesses from $25,000 to $100,000 to help them expand and create jobs and extends the current capital gains and dividend income tax rates.
I support continuing these tax policies. Lowering income tax rates and reducing the rates on capital gains and dividend income has contributed to the steady growth of our economy and has benefitted families and individual investors. Extending tax relief will help Kansans keep more of the dollars they earn and will provide certainty for individuals to invest and save for their future.
I also expect that Congress will approve legislation this year to continue providing relief from the Alternative Minimum Tax that disproportionately affects middle-income taxpayers.
The AMT was originally intended to ensure that all taxpayers, especially high-income taxpayers, paid at least a minimum amount of federal taxes. However, the AMT is not indexed for inflation, which has expanded its impact on middle-income taxpayers.
In 2004, about three million taxpayers were subject to the AMT. Unless Congress acts, up to 21 million taxpayers could be hit by the tax beginning this year.
One of the repeat complaints I hear from Kansas small business owners, farmers and ranchers is the effect the federal estate tax has on their ability to transfer ownership of their business to the next generation of their family.
Often these businesses have been owned and operated by the same family for multiple generations and have to be sold in order to pay the tax generated by the transfer of ownership.
This unfair tax penalizes Kansas businesses and family farms and costs Kansans jobs. I am co-sponsoring legislation that permanently repeals the estate tax. Last year, the House approved a permanent repeal. Along with several of my Senate colleagues, I have called on Majority Leader Frist to schedule a vote on estate tax repeal. I expect the Senate will vote on repeal before Memorial Day.
We need a simpler tax code. Americans should be able to file their own tax returns. Congress is considering a number of proposals to reform the tax code. In addition, an advisory panel commissioned by the president has made recommendations to streamline the current tax code and include some elements of a consumption-based tax system. Congress must take a serious look at how best to reform the tax code and make it simpler and fairer for all taxpayers. I am hopeful that we will begin that debate soon.
At this point in time, all options to reform the tax code must be put on the table for debate.
Many Kansans who support tax code reform shared with me their concerns about maintaining important tax deductions like those for mortgage interest payments and health insurance costs. Others have raised concerns that any change should not restrict the deductions for charitable giving, tax credits for education, or the earned income tax credit. I appreciate these concerns and will work to address these issues when we take up a tax reform measure.
Since coming to Congress, I have supported legislation to help Kansans keep more of the dollars they earn. I will keep working to lower the tax burden on Kansan taxpayers.
Pat Roberts is the senior senator for the state of Kansas in the U.S. Senate.