It’s Tax Day—a day Americans of all ages have come to dread. Each year it feels like it is becoming more difficult to get ahead in this country than it used to be, especially for younger Americans. Millennials face an uphill battle for economic opportunity and financial independence.
Unfortunately, a complicated tax code is making the American Dream even more difficult to achieve. Washington needs to alleviate burdens on young Americans by reforming the tax code to empower the next generation of leaders, entrepreneurs, and inventors.
Millennials have a vested interest in seeing the tax code reformed because they are entrepreneurially-minded. More than two-thirds of millennials want to start their own business one day, according to a recent Bentley study, and by 2025 millennials will comprise 75 percent of the U.S. workforce.
The truth is, it is not all imagination and invention for small business owners and job creators. The National Small Business Association found, “The overwhelming majority of small businesses, 67 percent, say that federal taxes have a significant to moderate impact on the day-to-day operation of their business.”
The burdens on small business for tax compliance can be costly and confusing. Fifty-nine percent of small businesses say that the administrative burden of preparing their taxes is larger than the financial burden. The convoluted tax code is now almost 4 million words — four times the length of the Harry Potter books combined. Eighty-five percent of small businesses pay for help navigating the complexities of the tax code, and for almost half of small businesses that help costs more than $5,000. Then they still have to pay the taxes!
Reforming the complicated individual income tax code would help millennials pursue the dream of owning a business. According to the Tax Foundation, the number of businesses taxed under the individual income tax code, often called pass-through businesses, nearly tripled between 1980 and 2008, and in 2008 there were 31.8 million pass-through businesses in the United States. These are job creators who work hard and play by the rules, but the complex individual income tax code is difficult to navigate.
More than 75 years ago the instructions for a 1040 form were just two pages long, according to the National Taxpayers Union Foundation. Today the instructions are more than 200 pages. The IRS’s legal guidance for Obamacare alone is 3,322 pages.
Washington should make it easier to achieve the American Dream, not create an excessively burdensome tax code that discourages entrepreneurship. It is time to take action on efficient and effective reforms to simplify the tax code and give millennials the freedom they are hoping for as they pursue financial independence.
