FROM THE OFFICE OF PUBLIC AFFAIRS

Today, the Treasury Department is introducing new proposals to combat abusive tax avoidance. These proposals will increase transparency and disclosure of transactions that take advantage of complexities in the tax code. They will better allow the Internal Revenue Service to enforce our tax laws and the Treasury to identify anomalies in the tax law requiring correction.

The complexity of our tax code has created opportunities for abuse. These proposals will help us find and stop unscrupulous promoters who are marketing questionable transactions to taxpayers.

Our tax code is so complex it sometimes seems to be a secret code-a cipher. Even the well-intentioned may run afoul of its baffling provisions. This complexity creates two dangers. The first is that people will simply throw up their hands in frustration instead of paying. But the second and worse danger is that it leads some innovative thinkers to find and exploit loopholes. These tax avoidance strategies deliberately violate the spirit of our laws and are unfair to the vast majority of taxpayers, who do their best to comply with the code.

The search for loopholes diverts creativity and resources away from productive investments in our economy and reduces our economic potential. Taxpayers spend as much as $125 billion each year complying with the tax code. The cost of those lawyers and accountants adds to the price of every product, but they do nothing to make our factories more efficient, our computers faster or our cars more durable.

The 9,500 page tax code, with its endless convolutions, is an abomination unworthy of our society. Is it any surprise that some people run from it? It undermines notions of law of, for, and by the people, because even those who spend a lifetime studying can barely understand it. Certainly ordinary citizens cannot hope to figure it out.

The right way to eliminate abusive tax practices is to simplify the tax code. We are working on long-term and short-term plans to address complexity in the code, eliminating redundant provisions and unintended consequences. In an ideal world, we would throw away the current code and start from scratch. Until that day, we will take steps such as this proposal to do away with transactions that abuse the intent of the code.