Legislation

The witnesses missing from tax hearings: average taxpayers

As Congress raced to pass long-stalled health, climate and tax legislation this summer, Democrats advanced the country’s latest update to U.S. tax laws, giving the IRS $15 million to design a free “e-file” tax return system.

However, over the course of several months working on the legislation, on no occasions were working Americans asked in hearings before the main tax writing and tax collection oversight committees in Congress to describe or comment on the personal administrative work of filing their yearly taxes.

That process usually consists of filling out different kinds of forms, using a piece of software or interacting with agents in the tax preparation industry. Instead of hearing from working taxpayers who file their own forms, the congressional panels heard from certified public accountants (CPAs), a business executive, a watchdog agency member and a “taxpayer experience” officer, among other specialists.

In one hearing in February, titled “Spotlighting IRS Customer Service Challenges,” the witnesses were an IRS officer, a director of strategic issues at the Government Accountability Office and the chair of the tax executive committee at the American Institute of CPAs — though no direct IRS customers.

While members of the tax-related committees maintain they regularly hear from average taxpayers at constituent events back home, the hearings in the first half of 2022 were the latest example of working taxpayers almost never being asked to testify before the panels, which instead opt to hear from tax experts, business owners, advocates, lawyers and other types of analysts with a professional relation to the hugely complicated U.S. tax system.

An analysis by The Hill of 49 tax-focused public hearings of the House Ways and Means Committee and the Senate Finance Committee held since the last major overhaul of the U.S. tax code in 2017 shows that on only two occasions — both relating to unusual tax relief measures following the coronavirus pandemic — were working Americans invited to hearings to share their experiences of U.S. tax policies directly with the lawmakers who write them.

Meanwhile, 207 experts in various official and professional roles within the U.S. tax system testified as witnesses in the 49 hearings analyzed by The Hill since the Trump administration’s Tax Cuts and Jobs Act was signed into law. Control of both the House and Senate changed hands between Democrats and Republicans during that period.

Broken down by category, those experts comprised 57 public officials, 57 business executives or trade association representatives, 48 policy advocates, 18 legal experts, 12 academic policy experts and 15 specialists in other categories like union organizers and volunteer organization representatives.

Some of those hearings were specifically to get updates from officials on various government processes, such as when the IRS commissioner gives a progress report on the current tax filing season or when the Joint Committee on Taxation reports nonpartisan analysis of proposed legislation. Exempting hearings reserved for officials, the number of experts was 173.

The near-total emphasis on hearing from policy and legal experts, advocates and other specialists is not unique to the tax-related panels, and lawmakers often turn to those types of witnesses to help parse and explain the complicated U.S. tax code.

In 2012, the IRS’s Taxpayer Advocate Service wrote in a report that “the tax code is so complex that the IRS has difficulty administering it,” adding it “requires the significant majority of taxpayers to bear monetary costs to comply, as most taxpayers hire preparers and many other taxpayers purchase tax preparation software.”

Still, longtime observers note that in the past tax committees more regularly consulted people who didn’t specialize in taxes for their personal views and experiences in how they paid their annual taxes to the government.

“It used to be that they would do that,” said former tax reporter Howard Gleckman, now a policy analyst with the Urban-Brookings Tax Policy Center, a Washington think tank. “But congressional hearings really serve two purposes. One of them is to actually elicit information for the record from experts, and the other is the dog-and-pony show. It’s to have a witness that’s going to express the view that the party agrees with, so they can say, ‘A normal person came and said the current state of law is terrible and we need to fix it and here’s why.’ ”

Gleckman added that “these witnesses are generally very highly scripted, and there will be a lot of interaction between a committee staff and the witnesses about exactly what it is the witness is going to say, and it’s easier to do that with professional witnesses like lobbyists than it is to do it with real people.”

Some committees have practiced trying to find real working people to testify on policy issues before their panels. In a March 17 hearing of the Senate Special Committee on Aging concerning banking and credit issues, Shelley Jaspering, a grocery store clerk with a disability, was invited to explain her financial situation to senators and how it related to various government policies.

“I’m 44 years old and work part time as a pricing assistant at Wheatsfield Cooperative. I also love to sew and occasionally sell things at our local farmers market,” Jaspering testified. “I was hired full time at Wheatsfield, which also luckily gave me full-time benefits including an IRA and short-term disability insurance.”

“The requirements of Medicaid, Supplemental Security Income, Social Security Disability Insurance, vocational rehabilitation and state programs are overwhelming. We need understandable information about how to manage our benefits and earnings. We need to locate trusted people that we can count on to walk us through the financial stages in life,” she told the committee.

Congressional aides on the Ways and Means and the Senate Finance committees told The Hill that most of their members’ interactions with working Americans happen outside the committee chamber.

“Hearings aren’t the only means by which we develop legislation, though they are important,” one House aide told The Hill in an email. “Members have constituent meetings all the time where they meet with regular folks, and district work necessitates meeting with local business owners.”

“If you think about the amount of time any member of Congress spends in their district and talking to constituents about their taxes, you may actually reasonably conclude that we engage with regular people far more frequently on tax policy than we do with the Beltway policy set, and that the purpose of the hearings is to take the formal insight of formal experts,” the aide added.

An aide on the Senate Finance Committee, currently chaired by Sen. Ron Wyden (D-Ore.), told The Hill in an email that the committee’s work on tax policy is entirely geared toward the interests of working families and that this is reflected in various hearings.

“The Finance Committee under Chair Wyden’s leadership centers working families in all its efforts on tax policy. For example, hearings on incentives for clean energy manufacturing, the retirement crisis, the struggles of small businesses to comply with state tax laws, and the lack of affordable housing — just to name a few — all revolved around creating jobs and financial security for American families,” the aide said.

Since tax policy affects 144 million U.S. taxpayers — covering a wide range of circumstances and income levels — trying to synthesize them into one or two representative witnesses offers a challenge many may view as impossible.

Still, aggregating the voices of regular taxpayers before congressional committees is one of the jobs of the National Taxpayer Advocate (NTA), an office within the IRS that describes itself as “your voice at the IRS.” The NTA says that it can recommend ” ‘big picture’ or systemic changes at the IRS or in the tax laws.”

But the NTA has only testified before the Senate Finance and House Ways and Means committees four times in the years since the 2017 tax bill was passed, and only eight times before any congressional committee. The NTA did not respond to a request for comment on this story.

Several hearings during that period have lacked mainstream voices, including an April 2021 hearing titled “Creating Opportunity Through a Fairer Tax System.” The hearing had six witnesses — two Beltway policy advocates who talk about taxes for a living, a scholar of accounting, a law professor and two business owners — but no one who works simply as an employee of a business unrelated to the tax field.

Another hearing of the Senate Finance Committee held in May 2019 on ways to pay for retirement plans had three witnesses from the lobbying and financial sectors and one state government official, though no current or prospective retirees.

Another in September 2017 titled “Individual Tax Reform” had two policy advocates from the same Washington think tank, a vice president of a trade group for real estate agents and a law professor, though no one was invited to speak on behalf of individual taxpayers.


Go to Source
Author:

Powered by WPeMatico