Sen. Ron Wyden, D-Ore., and Judd Gregg, R-N.H., have introduced legislation to eliminate many of the exemptions, deductions, credits and other tax breaks in the Tax Code.

Their bill, the Bipartisan Tax Fairness and Simplification Act of 2010, would also eliminate the alternative minimum tax and reduce the number of individual tax brackets from the current total of six to three: 15 percent, 25 percent and 35 percent.  The bill would nearly triple the standard tax deduction. Wyden and Gregg plan to make it possible for most taxpayers to file a simple one-page 1040 form, and allow individuals and families to request that the IRS prepare a tax return for them to review and sign.

To encourage small business growth, those with gross annual receipts of up to $1 million would be able to permanently expense all equipment and inventory costs in a single year. To help American corporations compete internationally, the Wyden-Gregg bill would reduce the top corporate tax rate of over 35 percent and replace the existing six corporate rates and eight tax brackets with a single flat rate of 24 percent. Wyden-Gregg would reduce corporate tax rates approximately 30 percent — below the corporate tax rates of Canada, Germany, France, and many other U.S. trading partners — to help U.S. domestic and multinational corporations to better compete in a global economy.

“Senator Gregg and I are demonstrating that there is room for Democrats and Republicans to agree on tax reform,” said Wyden in a statement. “By simplifying the Tax Code and scaling back tax breaks for special interests, we can give everyone an opportunity to get ahead.”

The Wyden-Gregg bill would streamline the Tax Code by eliminating a number of specialized tax breaks that favor one business sector or group of individuals over another. They hope to make the Tax Code fairer and raise funds to extend tax relief on a more equitable basis. They contend that the simplifications would make it harder for businesses and individuals to avoid paying their taxes. The tax simplification would also include the elimination of incentives to export jobs and keep foreign earnings overseas.

“For far too long, our tax system has been overly complicated, burdensome and unfair to taxpayers and to small businesses that are the economic engines of our nation,” said Gregg in a statement. “This investment-oriented proposal will bring us back to common-sense tax laws that encourage people to create jobs and make our nation more competitive.”

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