The Bipartisan Tax Fairness and Simplification Act of 2010, proposed by Senators Ron Wyden (D-OR) and Judd Gregg (R-NH), offers a broad reform of the federal income tax system. On the individual side, the proposal would impose a three-rate structure with a top tax rate of 35 percent and a standard deduction of $15,000 ($30,000 for married couples). It would also repeal the alternative minimum tax, replace the preferential rates on capital gains and qualified dividends with a 35-percent exclusion, and eliminate various deductions and exclusions currently in the tax code. On the corporate and business side, the proposal would replace the graduated corporate rate structure with a flat rate of 24 percent, reduce or eliminate many business tax preferences, and allow unlimited expensing of equipment and inventories for small businesses.
The Tax Policy Center has analyzed both the ten-year revenue effects and the distributional impact of the proposal, measured relative to both current law and current policy baselines. Current policy assumes permanent extension of the 2001 and 2003 tax cuts; under current law, the cuts expire as scheduled at the end of 2010.
Click here for a discussion of the plan and TPC's assumptions.