IPI Publication Press Release
IPI Issue Brief
Related Publication Title:
A Framework For Tax Reform
Released by Lawrence A. Hunter and Stephen J. Entin on 04/18/2005
IPI Issue Brief
Related Publication Title:
A Framework For Tax Reform
Released by Lawrence A. Hunter and Stephen J. Entin on 04/18/2005
Full Text
Press Release (02/16/2005)
Press Release (04/18/2005)
Full Text PDF
Contact: Sonia Blumstein, soniab@ipi.org, (703) 912-5742 office, or (202) 213-0379 cell.
(Washington, DC): The Tax Reform of 1986 was a disaster. While on one-hand the reform “broadened the base and lowered rates,” the damage it wrecked (e.g. tax hikes on new saving and investment, eliminating the investment tax credit, ending capital gains differential, the list goes on…) led to a recession in the short run and eventually led to today’s burdensome, anti-growth system – one that fails to raise the necessary revenue to fund government in an efficient manner, and discourages productive activity by American workers and entrepreneurs.
“The President’s tax reform commission should establish neutrality, visibility, fairness and simplicity as criteria for a reformed tax code that will improve the economy and promote better government,” note Lawrence Hunter and Stephen Entin in a study released by the Institute for Policy Innovation (IPI).
These four attributes of a sound tax system are defined in the report, “A Framework for Tax Reform”:
Neutrality:
- · Tax all income at the same rate.
· Avoid multiple layers of tax on capital, treat saving and investment as earning income, and tax all savings similar to the way
current pensions, IRA’s, 401 (k), etc, are taxed.
· Reject depreciation of investment and inventory purchases.
· Eliminate the estate and gift tax.
- · Levy taxes as openly as possible with an annual accounting mechanism.
· Collect revenues directly from the people, not from taxes buried in business transactions.
· Tax as many people as possible, except only the very poor.
Fairness:
- · Administer a proportional (single-rate) tax on income.
· Grant all individuals, regardless of income, an equal personal exemption.
· In combination, these steps would allow higher earners to pay more in tax than lower earner, but not in a greatly
disproportionate manner.
Simplicity:
- · Provide a clear definition of income
· Eliminate multiple layers of taxation on the same income.
IPI has long been known for our expertise on tax reform. Our 2002 "Roadmap to Tax Reform" project was the most extensive examination of fundamental tax reform ever undertaken. Now, IPI offers this Framework for Tax Reform to assist the President's tax reform panel in their consultations.
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