Senate Finance releases tax simplification options

And the paper also notes the party’s vast differences on whether the government should collect more revenue, at the same time that the two parties are debating budgets that lay out long-term tax visions.

“Members of the Committee have different views about how much revenue the tax system should raise and how tax burdens should be distributed,” the paper says.

“In particular, Committee members differ on the question of whether any revenues raised by tax reform should be used to lower tax rates, reduce deficits, or some combination of the two. In an effort to facilitate discussion, this document sets this question aside.”

The National Taxpayer Advocate, an in-house watchdog at the IRS, has for years said that the tax code is long overdue for a rewrite, calling it too complex and, at four million words, too long.

Nina Olson, the advocate, has also warned against cutting the IRS budget, saying it would impede the agency’s abilities to collect revenues.

In their paper, Senate Finance also discusses the rising problem of taxpayer identity theft, and the knotty issue of whether the IRS should increase its regulation of tax preparers.

The simplification options provided by Finance include getting rid of the Alternative Minimum Tax and other complex tax provisions, like the personal exemption phase-out and the Pease phase-out of itemized deductions that were just reinstated in the "fiscal cliff" deal.

It also calls for a more streamlined system of tax deadlines, and ways to make voluntary tax compliance simpler.