President Donald Trump is looking for ideas to reduce the tax burden on ordinary Americans. He has been actively searching for advice from the top experts in the field, such as Gary Cohn, the top economic advisor to the President.
Mr. Cohn said in an interview with the CNBC that President Trump was determined to do away with the high taxes and senseless regulations in the country and rebuild the crumbling infrastructure.
"We're very much into a pro-growth strategy here," Mr. Cohn said. He added that the President’s goal was to reduce corporate taxes to the "lowest possible level. We have high taxes relative to the rest of the world. That's a disadvantage for U.S. companies."
As of today, the federal corporate tax rate is pretty high in the United States. It is 35 percent, against the average of 23 percent in the rest of the developed world. Mr. Cohn emphasized, "We can't be that much higher than the rest of the world."
He added that Trump was determined to bring manufacturing jobs back into the US, but was looking into the future as well. "We really have to think about what our workforce is going to look like in 2020, 2030, [and] 2050," he added.
The advice from independent National Taxpayer Advocate Nina Olson is to simplify tax returns for everyone. She wrote in her annual report to the Congress, that "The code has grown more complex by the year ... The compliance burdens [it] imposes on taxpayers and the IRS alike are overwhelming."
Ms. Olson said that the Congress had made over 5,900 changes to the tax code and that was a bit too much. It adds up to one change to the tax code a day. This means taxpayers can choose from over 200 tax breaks.
Ms. Olson wrote in her report, "The tax code ... rewards taxpayers who can afford expensive tax advice and discriminates against taxpayers who cannot. ... The tax liability of an individual or business should depend solely on how much is owed under the law -- not on the taxpayer's or preparer's expertise in the law." (Here is the full text of Ms. Olson's report.)
Commissioner of the IRS Commissioner, John Koskinen disagreed with Ms. Olson’s criticism that the IRS was focused on tax enforcement at the cost of taxpayer service. He said, "The reality is our employees across the nation take great pride in serving taxpayers. We strongly believe that a balanced approach to taxpayer service and tax enforcement is critical to running a sound tax system."
Now, the complexity may be good business for CPAs and accounting firms, but it’s bad for the ordinary taxpayer. Because of the complexity, a vast majority of taxpayers in the USA hire a professional to prepare their tax returns. About 40 percent use tax software such as Lacerte or Drake tax software.
Some install the software in house and some use cloud-based services such as Drake Tax Hosting, Lacerte Tax Hosting, which is a lot cheaper and allows them to work anytime, anywhere, from any device or platform.