We are below full employment, real wages are falling, national savings is very low, and as Kash and AB note, projected deficits are as far as the eye can see. So what is the game plan for Bush’s second term – tax simplification as noted in his speech on 9/2: “The American people deserve and our economic future demands a simpler, fairer, pro-growth system. In a new term, I will lead a bipartisan effort to reform and simplify the federal tax code”. So what is the great game plan released by the White House? To appoint a commission to look into this “recommendation”:
President Bush Provides Leadership on Tax Reform
America has a growing, dynamic, and changing economy – but our tax code has not kept up with the times. The current tax code is a maze of special interest loopholes that causes America’s taxpayers to spend more than six billion hours every year on paperwork and other headaches. President Bush believes that America’s taxpayers deserve, and our future economic prosperity demands, a simpler, fairer, pro-growth system – and he has pledged to lead a bipartisan effort to reform and simplify the tax code.
The time that people spend complying with an overly complex tax code is a burden and a waste of resources that has been growing over time.
The Internal Revenue Code contains more than a million words.
The number of pages in the Internal Revenue Code and regulations has more than doubled over the past twenty years. Today’s “short” income tax form takes more than 11 hours to prepare – about the same as the long form did a decade ago.
It takes 12 pages of instructions to calculate the Earned Income Tax credit – a basic element of income-support for the working poor.
By 2010, more than one in five taxpayers will be forced to calculate their income taxes twice -once for the regular income tax and once for the Alternative Minimum Tax – and then pay the greater amount.
President Bush’s Action to Promote Tax Reform
President Bush announced that he is making tax reform a key priority.
The President will begin this effort by creating, by Executive Order, a bipartisan panel to advise the Treasury Secretary on options to fundamentally reform the tax code to make it simpler, fairer, and pro-growth.
The President’s goals are to make the tax code simpler and to increase long-run economic growth and job creation. Taxes should be applied fairly, and reform should recognize the importance of homeownership and charity in our American society.
Background: The Bipartisan Advisory Panel on Tax Reform
The President will create a Bipartisan Advisory Panel on Tax Reform:
The President will appoint experts, economists, and economically knowledgeable and experienced people of both parties.
The panel will be charged with holding public hearings and seeking input from Members of Congress.
The Panel will consult and debate and will provide its advice and a report to the Secretary of the Treasury as early as possible in 2005. This advice will inform the Secretary in his efforts to make recommendations to the President.
The Panel will be asked to answer certain questions.
Principle: The tax code should be simpler. How can tax reform reduce the administrative burden on taxpayers?
Should tax reform modify the current system or replace the system with a new one?
How should the transition from the old to the new system be handled?
Principle: The tax code should be fairer.
What tax loopholes need to be closed to eliminate tax evasion and ensure that everyone pays his or her fair share?
How can we ensure that the benefits of tax reform are spread widely among Americans?
What is the best way to make the tax system progressive, an attribute that is fundamental to fairness in taxation?
To what extent should the tax system be used to achieve goals other than raising revenue?
How should the tax system deal with different family structures?
Principle: The tax code should promote economic growth and job creation.
How can the tax system increase economic growth and job creation?
How can the tax system better encourage work effort, saving, and investment?
How can we make American workers and firms more competitive?
The Panel will be asked to present revenue-neutral reform options to the Secretary of the Treasury, at least one of which should be a reform of the current individual income tax system.