on october 18, 2005, the president’s tax reform panel released recommendations eliminating a host of special tax breaks and streamlining the filing process. tax policy center scholars have played a fundamental role in guiding the panel’s tax reform recommendations, including testifying before the panel on return-free tax systems, fair reform for families, reforming the individual alternative minimum tax, and issues resulting from a consumption tax base.
additionally, the tax policy center has conducted extensive research on many of the options considered by the panel. for example, based on press reports, the tax reform panel recommends
eliminating the deduction for state and local taxes. tpc research discusses the impact of repealing state and local tax deductibility and explores which groups of taxpayers are expected to see changes in their tax bills over time, and how eliminating deductibility would affect state and local governments.
a simplified “family credit” including expansion of the child tax credit. recent tpc research has led the way towards a unified child credit and found found marked disparities in benefits received among racial and ethnic groups due to design features of the child tax credit. additionally, the tax policy center also offers a primer on the provision of federal assistance to low-income families through the tax system.
an enhanced “savers’ credit”. tax policy center scholars have reviewed the evidence to date about the effectiveness of the savers’ credit and suggest options for strenghtening the credit.
changing the tax treatment of dividends so that dividends from domestic earnings are tax-free while other dividends would be taxed at the taxpayer’s ordinary rate. tpc scholars examined a in multiple analyses. tpc testimony comments on proposals to extend lower tax rates on capital gains and dividends.
allowing all filers to claim deductions for charitable contributions and health insurance premiums and limiting the exclusion for employer sponsored health insurance to $11,000 for a family policy. tpc testimony and research examines making the best use of tax policy to help charities and the implications of major expansions in health insurance tax credits.
repealing the amt. absent reform, tax policy center projections show the number of amt taxpayers skyrocketing from one million in 1999 to almost 31 million in 2010, engulfing virtually all upper-middle-class families with two or more children by decade’s end.
capping the mortgage interest deduction. a tpc brief targets several reforms that would deliver ownership subsidies more equitably and efficiently to households at lower income levels.
replacing the income tax with a tax on consumption. tax policy center scholars have testified that, in practice, a consumption-based tax system is less progressive and a poorer measure of an individual’s ability to pay. also, the panel rejected adopting a national retail sales tax, an issue studied extensively in recent tpc research.
expanded tax-free savings accounts. tpc analysis of a similar proposal to create tax-preferred accounts concluded that a better strategy to boost national saving and build wealth for households who are saving too little would be to encourage expanded pension coverage and participation. experts have also examined the pitfalls and benefits of taxing savings more broadly.
consolidating credits and deductions, and lowering rates. tpc research has described why our tax code is so overwhelmingly complex and what we can do to rectify the problem.
the tax policy center has convened a series of conferences discussing these and other issues related to reforming the tax code, including forums on the estate tax, tax shelters, capital income taxes, and tax reform and the environment.