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1 Scott A. Hodge, Testimony Of Scott A. Hodge before the House Small Business Subcommittee On Economic Growth, Tax and Capital Access 1 (2012)

handle is hein.taxfoundation/taxfaahf0001 and id is 1 raw text is: Written Testimony
Scott A. Hodge
Tax Foundation
Before the House Ways and Means Committee
Subcommittee on Oversight
On the IRS's Implementation of the Affordable Care Act
September 11, 2012
Mr. Chairman and members of the Committee, thank you for the opportunity to speak to you
today on the challenges facing the IRS's implementation of the Affordable Care Act (ACA).
Founded in 1937, the Tax Foundation is the nation's oldest organization dedicated to promoting
economically sound tax policy at the federal, state, and local levels of government. We are a
non-partisan 501(c )(3) organization.
For 75 years, the Tax Foundation's research has been guided by the immutable principles of
economically sound tax policy that were first outlined by Adam Smith - taxes should be neutral
to economic decision making, they should be simple, transparent, stable, and they should
promote economic growth.
In other words, the ideal tax system should do only one thing - raise a sufficient amount of
revenues to fund government activities with the least amount of harm to the economy. By all
accounts, the U.S. tax code is far from that ideal. Our current tax system is a Byzantine
monstrosity that spans 70,000 pages, costs taxpayers more than $160 billion per year to comply
with, and now dictates virtually every aspect of our lives.
Even before the ACA grafted more than 40 new tax provisions to the tax code and effectively
paired the IRS with HHS to manage one-sixth of the nation's economy, the relentless growth of
credits and deductions over the past 20 years has made the IRS a super-agency, engaged in
policies as unrelated as delivering welfare benefits to subsidizing the manufacture of energy
efficient refrigerators.
Although the IRS's annual budget may be relatively small, it is essentially controlling vastly
more budgetary resources than any Cabinet-level agency. The more than 170 different tax
expenditure programs in the tax code have a total budgetary cost exceeding $1 trillion. Some
$900 billion of those tax expenditures are targeted to individuals, while another $100 billion are
intended to benefit businesses.
These myriad tax provisions were enacted to achieve all manner of social and economic
objectives, such as encouraging people to buy hybrid vehicles, turn corn into gasoline, buy a


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