Attention older IRA owners, your RMD is due by Dec. 31
Mortgages offer nice tax breaks, but in limited parts of the U.S.

Sen. Tom Coburn's parting gift: a tax code decoder

Sen. Tom Coburn, the Republican who's served Oklahomans in Congress' upper chamber since 2005 and for six years in the House before that, is retiring as soon as this lame duck session wraps.

Many see Coburn as an obstructionist, especially when it comes to considering budget bills, and are happy to see him go. Others, however, think he's done a fine job crusading against irresponsible government spending.

In fact, Coburn will be remembered for the issuance of his so-called Wastebooks, reports on ways his Capitol Hill colleagues waste U.S. taxpayer money.

As his parting gift to U.S. taxpayers and his Washington, D.C., colleagues, Coburn has released his 2015 edition, the Tax Decoder. The 320-page document, he says, is intended to decipher the tax laws for all of us, lawmakers and laymen alike.

Lost in a maze
Since the historic 1986 Internal Revenue Code rewrite, Sen. Tom Coburn (R-Okla.) says "Congress has once again allowed the tax code to grow into an enormously complex labyrinth." His latest -- and final -- report on government waste details the costly tax maze turns.

In doing so, Coburn also points out more than 165 tax expenditures he calculates cost more than $900 billion this year and more than $5 trillion over the next five years.

The Tax Decoder, according to Coburn, includes the background, cost, and primary beneficiaries of each provision, along with specific examples of some of the recipients of certain tax breaks.

Many tax provisions to decode: Coming under Coburn's microscope are well known tax provisions, as well as more obscure tax preferences. Some of the tax breaks cited in the Tax Decoder include:

  • Billions of dollars in tax breaks that go to wealthy pro sports team owners, who then can count the roster of players as a depreciable asset.
  • The Tuna Tax Break, which provides nearly $10 million to certain domestic corporations operating in American Samoa.
  • Tax credits for historic and nonhistoric structures that result in lost revenue of $1 billion annually and subsidize beachfront resorts, Major League Baseball stadiums, and luxury hotels.
  • Charities that qualify for 501(c)(3) tax exemption status but give little to their cause, such as Lady Gaga's Born This Way Foundation, which raised $2.6 million in 2012 and only gave away $5,000 for "grants to organizations or individuals."

Who's to blame? There is no shortage of tax subsidies for the rich and famous (which just happened to be the title of an earlier Wastebook from Coburn). Similarly, much federal revenue is lost via tax breaks for lower-income individuals.

And businesses, well they have their own select group of tax claims that cost the U.S. Treasury billions.

"Because many of those who pay no income taxes are at both ends of the economic ladder, those in the middle are squeezed the hardest," says Coburn. "While it is fair to expect those who have more to pay more and for those who have less to pay less, every citizen should contribute in some manner."

Tax code transparency: To make such tax contributions by all easier and fairer, suggests Coburn suggests a simpler, more transparent tax code.

"Due to the code’s complexity, your taxes are not a simple calculation of earnings and obligations," says Coburn. "Instead, taxes are determined by how well you can take advantage of the hundreds of tax credits, deductions, exclusions, and carve-outs tucked into the code. 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."

"Taxes should not be determined by who has access to the craftiest accountants, lobbyists and politicians," he says. "The tax code should be simple enough that everyone -- including members of Congress -- is capable of filling out their own tax return."

Reform on the horizon? Congress keeps talking about tax reform. It actually looks like some changes might be made in the upcoming 114th Congress.

Tom Coburn decoding the tax code 2014 report

The departing Coburn, however, won't be a part of any changes to the tax code. But his latest Wastebook, the Tax Decoder, still will be in Washington.

So Coburn may yet play a part in the needed tax code overhaul after all.

You also might find these items of interest: 


Feed You can follow this conversation by subscribing to the comment feed for this post.

The comments to this entry are closed.