Keep it simple.
When it comes to tax reform, independent National Taxpayer Advocate Nina Olson urges lawmakers to make simplification a priority.
"The code has grown more complex by the year ... The compliance burdens [it] imposes on taxpayers and the IRS alike are overwhelming," Olson wrote in her annual report to Congress released Tuesday.
She notes that Congress has made 5,900 changes to the tax code since 2001. That works out, on average, to more than one change a day.
Today, there are more than 200 tax breaks to choose from (e.g., credits, deductions, exemptions and exclusions). And many have overlapping purposes.
Olson, for instance, found there are at least 12 breaks that aim to encourage saving and spending for education; and another 15 pertaining to retirement savings. There are also varying definitions of "family."
So no surprise, then, that more than half of tax filers pay someone to do their taxes and another 40% use tax preparation software.
Among Olson's recommendations: Consolidate breaks that pertain to the same issue. In particular, she suggests consolidating the many breaks based on family status into just two: A family credit, to help with the cost of raising kids; and an Earned Income Tax Credit to assist low-income working tax filers.
She also recommends getting rid of or reducing the phase-out of tax benefits as income rises.
"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," Olson said.
The hundreds of tax breaks in today's code are also costly. They reduced federal revenue by at least $1.5 trillion in 2016, according to the Congressional Budget Office. That's more than the $1.2 trillion that lawmakers chose to spend on all domestic and defense programs during the same period.
Olson, whose office represents the interests of taxpayers, also calls on the IRS to improve tax administration and create a culture that places less emphasis on enforcement and more on customer service.
"In an enforcement-oriented tax agency, if taxpayers don't get the help they need to comply and they make a mistake, they are treated as if they are tax evaders. This treatment in turn breeds resentment and increases the risk that the taxpayer who was willing to comply is no longer willing to do so."
IRS Commissioner John Koskinen said the agency is still reviewing Olson's report.
But, he noted, "we agree with the Advocate that simplifying the nation's tax code would be good for taxpayers and tax administration."
Koskinen took exception, however, to Olson's assertion that the IRS is mostly focused on tax enforcement rather than taxpayer service.
"The reality is our employees across the nation take great pride in serving taxpayers," he said. "We strongly believe that a balanced approach to taxpayer service and tax enforcement is critical to running a sound tax system."