Recent Documents
See the full report here (updated November 21, 2005)
A Preliminary Evaluation of the Tax Reform Panel's Report (December 5, 2005)

ON NOVEMBER 1, 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. The Tax Reform Panel's recommended plans are summarized in the tables below.

Additionally, the Tax Policy Center has conducted extensive research on many of the options considered by the panel. For example, 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 similar proposal made by President Bush in 2003 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.

Suggestions for further reading:

• A Preliminary Evaluation of the Tax Reform Panel's Report. Leonard Burman and William Gale. December 5, 2005.
• Tax Reform Panel Testimony: Return-Free Tax Systems. Eric Toder. May 17, 2005.
• Tax Reform Panel Testimony: Tax Reform and Fairness for Families. Eugene Steuerle. March 23, 2005.
• Tax Reform Panel Testimony: The Individual Alternative Minimum Tax. Len Burman. March 3, 2005.
• Tax Reform Panel Testimony: A Comparison of Income and Consumption Taxes. William Gale. February 16, 2005.
• The Impact of Repealing State and Local Tax Deductibility. Kim Rueben. August 15, 2005
• Deductibility of State and Local Taxes. Len Burman and Kim Rueben. January 17, 2005
• Who Gets the Child Tax Credit?. Len Burman and Laura Wheaton. October 3, 2005.
• Providing Federal Assistance for Low-Income Families through the Tax System: A Primer. Frank Sammartino, Eric Toder, and Elaine Maag. July 2002.
• A Unified Children's Tax Credit. Adam Carasso, Jeff Rohaly, and Gene Steuerle. May 15, 2005.
• How to Design a Work-Friendly Tax System: Options and Trade-offs. Jon Barry Forman, Adam Carasso, and Adeel Saleem. June 2005.
• The Saver's Credit: Issues and Options. William Gale, Mark Iwry, and Peter Orszag. April 2004.
• Improving the Saver's Credit. William Gale, Mark Iwry, and Peter Orszag. July 2004.
• Taxing Capital Income Once. Len Burman. January 21, 2003.
• The Administration's Proposal to Cut Dividend and Capital Gains Taxes. William Gale and Peter Orszag. January 20, 2003.
• Congressional Testimony: Extension of Saving and Investment Incentives. Eric Toder. June 30, 2005.
• Congressional Testimony: Charities on the Frontline and Making the Best Use of Tax Policy to Help Them. Eugene Steuerle. September 13, 2005.
• Congressional Testimony: Charitable Giving and the Taxation of Estates. William Gale. September 13, 2005.
• Brief: Tax Credits for Health Insurance. Len Burman and Jonathan Gruber. June 23, 2005. Related Discussion Paper.
• Tax Incentives for Health Insurance. Leonard E. Burman, Cori E. Uccello, Laura Wheaton, and Deborah Kobes. May 16, 2003.
• The Expanding Reach of the Individual Alternative Minimum Tax. Len Burman, William Gale, and Jeff Rohaly. May 31, 2005.
• Brief: How to Better Encourage Homeownership. Adam Carasso, Eugene Steuerle, and Elizabeth Bell. June 29, 2005. Related Discussion Paper.
• The National Retail Sales Tax: What Would the Rate Have To Be?. William Gale. May 16, 2005.
• Congressional Testimony: Federal Revenue Options. William Gale. October 6, 2004.
• The Administration's Savings Proposals. Len Burman, William Gale, and Peter Orszag. March 3, 2003.
• Should We Eliminate Taxation of Capital Income?. Eric Toder and Kim Rueben. September 23, 2005.
• The Automatic 401(k): A Simple Way To Strengthen Retirement Saving. William Gale, Mark Iwry, and Peter Orszag. March 7, 2005.
• The Distributional Consequences of Federal Assistance for Higher Education. Len Burman and William Gale. April 2001.
• A Golden Opportunity to Simplify the Tax System: Options for Reforming a Complex Tax Code. Leonard E. Burman and William G. Gale. April, 2001.
• Economic Effects of Fundamental Tax Reform. Henry Aaron and William Gale. 1996.
• Tax Reform Is Dead, Long Live Tax Reform. William Gale. February 1997.
• Changes in Tax Preparation Methods, 1993-2003. Eric Toder. May 9, 2005.
• Contemporary U.S. Tax Policy. Gene Steuerle. 2004

More tax reform publications

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