The Republican's proposed Tax Cuts and Jobs Act is the archetypical tax reform bill: it lowers taxes but increases the Code's complexity.  High taxes are bad, but a complex tax code is worse.  America deserves better.

This is not to say that high taxes are not a problem.  They are.  America is one of the most heavily taxed jurisdictions in the developed world, and high taxes are the main reason why so many firms move their head offices out of America and into low-tax jurisdictions like Canada and Ireland.  The corporate inversion epidemic is made in Washington, D.C.  High taxes also hurt individuals: according to the Tax Foundation, taxes cost Americans more out-of-pocket earnings than do shelter, clothing, and food combined.  Tax cuts are a must.

The Tax Cuts and Jobs Act largely delivers on this front.  The legislation will slash the corporate tax rate from 35 to 20 percent, reduce the number of individual income tax brackets, and double the basic personal deduction, which will let people shield more of their income from Uncle Sam.  And perhaps most importantly, the bill will remove loopholes that allow illegal aliens to collect some $23 billion in tax credits annually.

Not only that, but the act will likely generate economic growth.  The Tax Foundation, a nonpartisan public interest group, estimates that the Republican plan will create up to 1 million new jobs and increase GDP by 3.9 percent "over the long term."  It also estimates that the average after-tax income for a middle-income family will grow by $2,598 over the next ten years as a direct result of the legislation.  This is good news, and it is consonant with research from the Council of Economic Advisers, which found that reducing the corporate tax rate from 35 to 20 percent will increase America's GDP by 3 to 5 percent over the coming decade.

All that being said, Congress missed the mark.  The biggest problem with America's tax system is complexity, not high rates.

Most people agree with this statement.  According to a 2017 Gallup poll, 51 percent of Americans think they pay too much in taxes.  The rest think they pay a fair amount.  Although America is divided over the tax rate, everyone agrees that complexity is a problem: fully 90 percent of Americans think the tax code is too difficult for ordinary people to understand.  Reducing tax complexity is something everyone agrees on and something America desperately needs.

The U.S. Tax Code has nearly tripled in length from President Ronald Reagan's substantive reforms in 1986, and as of 2016, the Code proper is 2,650 pages long.  This works out to a staggering 3.7 million words.  To make matters worse, there are a further 70,000 pages of tax forms, instructions, and regulations taxpayers must also comply with.  On top of all that, there are innumerable court decisions that govern the way tax legislation and regulations are interpreted – ordinary people cannot easily access or understand them.

In all honesty, it is doubtful that any American alive today, including the very best New York tax attorneys, has read every piece of relevant tax law.  And even if someone has, there is no way he can remember how everything fits together.  The Code is just too long and too complex.

Complexity hurts American in a number of ways.  First, it costs money: American people and businesses spend big bucks hiring accountants and lawyers simply to comply with the Tax Code.  In fact, America spent an absurd $409 billion on tax compliance in 2016 – a record high.  This works out to roughly 7 billion wasted hours filing taxes, which is equivalent to 3.7 million people working full time for a year.

The high costs associated with filing taxes also hurts America by favoring big multinational corporations over local businesses.  Think about it.  Accountants and tax lawyers are expensive, and so are the potential consequences of filing an incomplete or incorrect tax return.  This puts many small businesses in a bind: either they shell out big money to tax specialists or they risk missing out on the plethora of obscure tax deductions.  If unlucky, the tax man may even pay them a visit.  Either way, complexity benefits big companies who can afford to deal with said complexity relative to local businesses.  Complexity is regressive.

Finally, complexity breeds corruption.  The more complex the Tax Code, the more places there are to hide goodies for special interests and donors.  For example, you can deduct up to $10,000 in taxable income for repairs to your whaling boat if you have one (and yes, whaling is mostly illegal).  Likewise, men are allowed to deduct up to $14,500 in taxable income for surgical operations to make them look like women.  Women can probably do the same in reverse, although it has not yet been litigated.  Deductions like these would not be available if the Code were simpler.

The Tax Cuts and Jobs Act is a decent stab at tax reform, but if Congress is serious about reform, it must focus on simplification, not cuts.