US panel suggests simplifying taxes, drop deductions
Washington, November 2:
Declaring income tax system “has become a running joke,” a presidential panel recommended rewriting United States’ tax laws by eliminating virtually every deduction and credit and replacing them with simpler benefits for more taxpayers.
Treasury Secretary John Snow said he would study the report, issued Tuesday by the President’s Advisory Panel on Federal Tax Reform, and hoped to present formal recommendations to President George W. Bush later this year.
“These are bold recommendations,” Snow said. “These are recommendations that will challenge orthodoxy in a lot of ways on tax policy.” Some observers questioned whether a comprehensive tax revision could be enacted anytime soon, given Congress’ preoccupation with hurricanes, war and federal budget deficits.
“The timing right now seems a little off,” said Lindy Paull, co-managing partner at the Washington National Tax Services of PricewaterhouseCoopers and former chief of staff for the committee that advises Congress on tax matters. “To try to do something fairly comprehensive, I think, takes more than the time that Congress will have to devote to it next year because of the election.” The nine members of the commission said key recommendations would be unpopular.
“Many stand waiting to defend their breaks, deductions and loopholes, and to defeat our efforts,” the group said in a letter to Snow. Marginal tax rates would be lower for individuals and businesses under alternative tax systems endorsed by the panel.
Both would eliminate most deductions and credits in an effort to simplify tremendously complicated calculations. The second of the two tax systems aims to reduce taxes on savings and investments made by businesses and families.
In place of current tax breaks, the panel would create a few tax credits and three savings accounts that they said would encourage homeownership, charitable giving and saving while also supporting lower income workers and their families.
For taxpayers, those changes would shrink the length of their tax forms and reduce the need for professional help.