The Presidents Economic Recovery Advisory Board has released a lengthy report describing how to achieve three lofty goals: simplify the tax system (yay!), improve taxpayer compliance with existing laws, and reform the corporate tax system.
The board, chaired by former Fed chairman Paul Volcker, was asked to consider a variety of options for achieving those goals, with the proviso that they avoid raising taxes for families earning less than $250,000 a year, in line with President Obamas campaign promises. Among the myriad options presented for simplifying the Tax Code are consolidating family credits into a work credit and a family credit, consolidating and segregating non-retirement savings, simplifying the taxation of capital gains, eliminating the AMT (double yay!), and simplifying the home office deduction.
To address corporate tax issues, the report ponders the notions of moving to a territorial system, transitioning to a worldwide system with a lower tax rate, and just plain retaining the current system but lowering the statutory corporate tax rate. In terms of improving tax compliance, the report examines various options for increasing information reporting and source withholding, clarifying the definition of a contractor, examining multiple tax years during certain audits, and so on.
In other words, theres really a grab bag of options for reforming the Tax Code and hopefully improving it to some degree. However, dont expect any easy answers here. The report emphasizes at the outset that PERAB, as the board is known for short, was not asked to recommend any major overarching tax overhauls along the lines of the Tax Reform Act of 1986. Instead the board gathered information from business leaders, policy makers, academics, individual citizens, labor leaders, etc., and boiled down the results into a 118-page report.
While it may not be as much of a page-turning beach read as the Stieg Larsson dragon-tattooed girl trilogy, it still provides some worthwhile suggestions. One can only hope members of the administration and Congress will peruse the report when they finally return from their own summer holidays in the sun.