Home | Blog | Some Are Calling it “Taxmaggedon”

Some Are Calling it “Taxmaggedon”

In a recent Senate Finance Committee hearing Senator Hatch (Republican, and the Ranking Member) and Senator Baucus (the top Democrat) both had interesting comments about the US  Tax system.
Senator Hatch said, in part:

“…(T)his nation faces a real crisis in just a few months. What some have called taxmaggedon is rapidly approaching. Unless Congress acts, come January 1, 2013 Americans will be hit with the largest tax increase in history.This record-breaking tax increase will hit every American that pays income taxes. Small business owners will face a top marginal tax rate hike of 17 percent…..

Don’t forget, the alternative minimum tax patch has already expired, leaving 26 million middle-income families and individuals paying $92 billion in stealth taxes in just 8 months. In fact, those 26 million families and individuals are required by law to have already made their first estimated tax payments this year. ….

The rate of tax on dividends will nearly triple, from 15 percent to 43.4 percent. ….
And the rate of tax on capital gains will increase by 59 percent, from 15 percent to 23.8 percent.

These tax increases are ones for the record book, and Congress should have already prevented them from occurring. They are a ticking time bomb for families, individuals, and the American economy. …

Unfortunately, some view the expiration of such a large part of our tax code at the end of the year as a bonanza for big government. Deploying the tired rhetoric of class warfare, they welcome these tax increases, which will finance every higher government spending. ….

With respect to the IRS’s performance when it comes to the tax filing experience, I will say that one thing that stands out is its stated goal of answering 61 percent of phone calls from taxpayers. I have heard of setting the bar low so that it’s easy to exceed expectations, but 61 percent of phone calls answered is simply not good enough. It would earn a student a D-minus at best, and that is probably grade inflation.

On this issue, I would give the IRS a failing grade, and I suspect that the nearly 40 percent of taxpayers whose calls go unanswered would agree. ….”

His Democrat counterpart, Senator Baucus followed suit.  He said, in part:

“Albert Einstein once said, “The hardest thing in the world to understand is the income tax.”….

We need to simplify the tax code. Reforming and simplifying the code will make filing taxes easier for Americans, and it will reduce uncertainty.

Today we’ll look at the ways we can improve the taxpayer experience. We will consider how to deal with the 132 tax provisions that frequently expire and create uncertainty for taxpayers. And we will look at how to effectively use technology and improve communication between taxpayers and the IRS.

We know that the great majority of taxpayers follow the law. More than eighty percent of taxes are paid on time. This voluntary compliance rate shows that most folks are doing their part every April, but improving the taxpayer experience and creating certainty can push that rate even higher. …

Frequent and last-minute changes to the tax code and complex IRS procedures create uncertainty and confusion. …..

The IRS needs to make compliance easier on taxpayers, and we need to make the process simpler….

As we consider tax reform, we have an opportunity – and an obligation – to improve the taxpayer experience. Through tax reform, we can reduce the compliance burden on taxpayers. We can make things easier for folks every April.

So let us reform the tax code to give taxpayers certainty and predictability. Let us make it easier for taxpayers to work with the IRS to resolve issues quickly and correctly. And let us take the right steps to improve the taxpayer experience..”

If wishing would only make it so!

But Congress still has little if any sympathy for Americans that live overseas. Most who live in an industrial country often owe very little in US tax—-we pay quite a bit more in foreign taxes. Yet Congress continues to add to the complexity and cost of being a compliant taxpayer.  No wonder more and more overseas Americans are leaving the country.

Today the IRS published its quarterly list of Americans who have expatriated.  For the first quarter of 2012 360 Americans gave up their citizenship.   Last year almost 1,800 gave up their citizenship—and the main reason—the US tax system.

Here to Help

Here to Help

Contact one of our specialists

3 Harbour Exchange Square
London E14 9GE
United Kingdom

T: +44 20 7357 8220

F: +44 20 7357 8225

Email Us

Brandschenkestrasse 20
CH-8001 Zurich

T: +41 44 387 8070

F: +41 44 387 8079

Email Us

Rue de-Candolle 19
CH 1205

T: +41 22 700 2500

F: +41 22 700 2526

Email Us

Middle East, Asia and the Americas
US Tax & Financial Services GmbH
Löwenstrasse 28
PO Box 1367
CH-8021 Zurich

T: +41 44 387 8070

F: +41 44 387 8079

Email Us

Norra Skeppsbron 5B
SE 803 10, GAVLE

T: +46 26 18 82 22

M: +46 70 61 88 016

Email Us

Read Services in :EnglishFrenchItalianGerman