A Top GOP Priority: Fixing Our Disgraceful Tax Code

A Top GOP Priority: Fixing Our Disgraceful Tax Code

“Voters See Sinking America,” trumpets a new Rasmussen survey

Why so gloomy? Maybe it’s because we the people don’t trust our government to act in the best interests of average Americans. One data point: the recent Omnibus spending bill, which is riddled with the kinds of special goodies – funds to promote travel to Las Vegas and a national heritage area in Wheeling, West Virginia, for instance – that dull our optimism.

Also depressing is the imminent retirement of Senator Tom Coburn, one of the few legislators willing to confront the waste and fraud in government. On his way out the door, Dr. Coburn has fired yet one more volley. His latest report, called Tax Decoder, reveals the ghastly complexity and unfairness of our tax code. From enabling gamblers, to underwriting Hollywood moguls, our tax system screams for reform. Tackling this mess is a project the GOP should be eager to undertake; they can show middle-class Americans that they believe in good governance, and do not reflexively back every handout favored by Big Business and special interest groups.  

Related: Coburn Takes His Parting Shot at the Tax Code

There are few political leaders in Congress who have done more to reveal the utter stupidity of our governing bodies. Each year, Dr. Coburn’s annual Waste Book has pilloried the kind of foolishness we taxpayers have come to expect and deplore. The 2014 version outlined $25 billion in unnecessary outlays – including spending for Swedish massages for rabbits, synchronized swimming for sea monkeys and a study of “angry” spouses stabbing voodoo dolls.  While some of the programs are downright funny, there is nothing humorous about the ongoing political favors for race track owners and sugar producers – the obvious paybacks that not only drain taxpayer funds from more worthy recipients, but also breed distrust of our government.

In Tax Decoder, Dr. Coburn turns his sights on our dysfunctional tax system. The federal government rakes in $1.7 trillion in taxes; but also permits $900 billion in 165 separate so-called tax expenditures – the euphemism for handouts. The report says, “As a result of all of these loopholes and giveaways, nearly half of American households pay no federal individual income tax, including over a thousand with an adjusted gross income of $1 million.”

For some time, there has been a call to simplify our tax code, now weighing in at more than four million words and 70,000 pages. (As Coburn’s team points out, that’s in contrast to 27 pages in 1913.) It’s overwhelming to taxpayers, and almost as daunting for reformers.

Related: IRS Gave $14.5 Billion in Low-Income Tax Credits to the Wrong People

Where to start?  There are obvious places where sanity should prevail. For instance, gamblers get to deduct their losses at the roulette table. Why should the rest of us underwrite someone’s urge to throw his money away? Similarly, owners of pro sports franchises get to write off their purchase of a team; given the rewards of playing in these leagues, surely these folks can fend for themselves.

Ditto Hollywood types who rake in tax subsidies. Americans love movies, and the film industry is good for our economy -- but do we really need to subsidize them? Maybe if their product had to stand on its own they’d be a little more discerning about producing movies people actually want to see. These goofy gaps need to be closed.

Adding to the mess is that our tax system is lax. Coburn claims the IRS dished out more than $10 billion a year over the past decade in fraudulent refunds. It is also inequitable.  Native American tribes, and the corporations they control, are tax-exempt. Ditto the NFL and PGA – which rake in millions each year.

Related: Congress’ Big Spending Bill Covers Bullets, Cow Farts, and Chinese Chickens

Coburn notes that many tax breaks spring from good intentions, but have been subverted. For instance, he says that the Research and Development Tax Credit was meant to encourage mid-sized companies to invest more in research and development, but that more than 80 percent of the credit went to big companies; in 2011, four giants -- Google, Intel, Boeing and Apple – were the leading recipients.

These companies should not be faulted for pursuing their self-interest; that is their job. It is their job to hire lobbyists and to try to win benefits. It is their job to take advantage of loopholes. When President Obama berates as un-patriotic corporations who game the system to lower their taxes, he is off the mark, and exposing his ignorance. It is up to our lawmakers to set out rules that favor the nation over their donors – rules that make sense.

Related: How Our Tax Policy Can Kill Jobs and Stifle Innovation

This is clearly an unmet challenge. One of the most egregious flaws in our system is the treatment of charitable organizations. While those on the Left have focused on the political nature of some not-for-profits, there is plenty of room for bipartisan sniping. Coburn cites Lady Gaga’s Born This Way Foundation, which he says raised $2.6 million in 2012 but gave away only $5,000 in “grants to organizations or individuals.” Along the same lines, Kanye West’s foundation took in over half a million dollars in 2009 but handed over only $583 to charity.  

At a recent forum at The Manhattan Institute, Dr. Coburn lamented the lack of leadership on Capitol Hill. Though all acknowledge problems with our government programs, few are willing to step up. There has been, for instance, virtually no follow-up to a scathing report his office published on criminals scamming our disability program. So damning was Coburn’s investigation that “60 Minutes” aired a riveting piece based on it; no one has been prosecuted for the revealed fraud.

Americans are tired of inept and indifferent government. All parties want to see taxpayer monies distributed carefully and fairly. This is a theme that ordinary people talk about – but that our elected officials ignore. Attacking obvious and offensive examples of fraud and waste is a golden opportunity for the GOP, even if it means biting a few hands that feed them. The time has come.

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