VITA = tax simplicity = tax reform

Strengthening VITA should be among the first orders of business for any federal tax reforms prioritizing “simplicity,” according to comments NCTC submitted to Congress on Tax Day.

The working families who would benefit from improvements in Volunteer Income Tax Assistance also need policymakers to bolster targeted tax credits as well as important savings policies, we added.

Our suggestions to the U.S. House Ways & Means Committee came in response to the call for information and suggestions regarding tax reforms. Both Ways & Means and the Senate Finance Committee have been examining various options. Particularly with the latter planning to zero-in on talk of family tax credits this week, we’ve also passed-along our thoughts to Senators.

As is well-documented, the overcomplicated tax code certainly can and should be simplified. But as we’ve blogged earlier, it would be dangerous to conflate and flatten income tax rates too aggressively in the name of “simplicity,” as that could harm progressivity and – specifically – low-income families. But there are some other options Congress should consider.

VITA’s well-trained and certified volunteers provide struggling families with free help in navigating their way through the tax code – yet its services are far too limited, and need strengthening.

“This is the kind of assistance that will long remain vitally important to many working families, regardless of the success of any other efforts toward making our tax system easier to understand,” we wrote to Congress. “The fact is that many households will still want some help navigating an often dizzying array of tax forms, schedules, filing requirements, definitions, etc. For many, such help is as necessary as it is desirable – as their other options include commercial tax preparers who often charge hundreds of dollars in fees.”

NCTC isn’t alone in making this pitch, either.

 “VITA [programs] help consumers keep their maximum refund – dollars that can then be saved or spent,” the Center for American Progress wrote in its own comments, echoing earlier calls CAP has made for boosting VITA.

NCTC’s comments also called for making permanent the American Opportunity Tax Credit and some currently temporary improvements in the Earned Income Tax Credit and Child Tax Credit, as well as some new improvements.

Our suggestions reflect the three basic principles for tax reform we adopted last year: greater tax-code fairness, adequacy, and simplicity.