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Preliminary Revenue Estimate and Distributional Analysis of the Tax Provisions in A Roadmap for America's Future Act 2010
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The Roadmap for America's Future Act of 2010 is a detailed reform package that overhauls Social Security, Medicare, Medicaid, and the U.S. federal tax system. In a January 27, 2010, report, the Congressional Budget Office (CBO) analyzed the spending provisions of the plan. This paper presents the Tax Policy Center's estimates of the revenue and distributional impact of the Roadmap's tax provisions.
Create an alternative simplified income tax system. The Roadmap would create an alternative federal income tax system, with a broader tax base and a lower, two-rate tax structure. It would eliminate all current deductions and credits and exempt income from interest, dividends, and capital gains from the individual tax. Flow-through business income (i.e., income from sole proprietorships, partnerships, and S corporations) would only be taxed to the extent that it represents wage income. Taxpayers could choose to calculate their tax liability under either the current tax system or the simplified tax system. They would have to make their election within the first 10 years and could change tax systems one additional time or whenever they experience a "major life event (death, divorce, or marriage)."Eliminate the estate tax. Consistent with no longer taxing investment income, the plan would repeal the estate tax for taxpayers in the alternative system. Because capital gains would not be taxed, the basis of inherited assets would no longer be an issue. The estate tax would continue for taxpayers who opt to remain liable for the current income tax.
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