Our current system of income taxes is too complex and does not serve the American people well. The number of deductions and loopholes make the entire process of filing taxes onerous and incredibly expensive for most people. Tax simplification is obviously needed. The question is: “What form should tax simplification take?”
My opponents are for the 30% Consumption Tax – a.k.a. “The Fair Tax”. The advantages and disadvantages are outlined in this recent National Review article: “A Misleading Sales Pitch“.
My solution to the current income tax system is encapsulated in a new bipartisan Income Tax plan currently circulating through Congress – the Wyden-Gregg Tax Plan. You will be hearing much more about this soon. This is a tax reform plan that has a real probability of passing.
The Wyden-Gregg Tax Plan has been rated by the CBO as being revenue neutral to the overall budget. Here are the main features:
- It cuts the number of tax brackets from 6 to 3 – 15%, 25%, and 35%.
- It cuts the top corporate tax rate from about 35% to 24% – this will make our businesses much more competitive in the global marketplace.
- It triples the Standard Deduction – in effect, a middle-class tax cut.
- It cuts corporate welfare spending – about $90 billion a year.
- Creates Lifetime Savings Accounts – like Roth IRAs on steroids.
- Gets rid of the Alternative Minimum Tax (AMT).
I would support this effort in Congress! It successfully simplifies our complex system. While vastly decreasing the time needed to prepare returns, it gets rid of many arcane deductions and gives a tax break to middle income taxpayers; it cuts our Corporate rates to spur competitiveness and create jobs; and it stops some of the biggest, most profitable companies in the world from getting government subsidies.