Why is the tax system in the U.S. beset with complexity? What has been done to address this complexity?

What will be an ideal response?

Some of the complexity of the U.S. tax system is a function of federalism and the number of different tax systems that exist at the state and local levels. The federal government collects approximately two thirds of all tax revenue, but states and localities remain significant actors in taxation. There are also a number of different taxes at the federal level. Greater complexity is also a result of the many deductions, exemptions, and other special treatments for particular constituencies that have been written into the tax system. While tax reforms of the 1980s helped to close some of the more egregious tax loopholes, in almost every revenue bill since 1986, some new special tax treatments have appeared adding, once again, more complexity to the system. Even the introduction of legislation in 1996 that requires Congress to identify tax breaks that are only enjoyed by relatively few individuals or firms has not stopped loopholes from being added to the tax code. Part of the reason that policymakers add these exemptions is that relatively few taxpayers monitor these special benefits.