The US President’s Economic Recovery Advisory Board (PERAB),
chaired by former Federal Reserve Chairman Paul A. Volcker, has issued a report on options for changes in the
current tax system to achieve three broad goals: simplifying the tax system;
improving taxpayer compliance with existing tax laws; and reforming the corporate
tax system.
The PERAB, an advisory panel, was established by President Obama in February
2009, with members drawn from outside the government. They meet periodically
and solicit information and ideas from all sectors to provide analysis and information
directly to the President on the design, implementation, and evaluation of policies.
The tax reform subcommittee is one of seven subcommittees of the PERAB, including
subcommittees on jobs, growth, and investment, and on financial markets and
regulation.
The PERAB tax reform report fulfills the specific mandate they were given -
to discuss the pros and cons of a spectrum of reform ideas. They were also instructed
not to consider policies that would raise taxes on families making less than
USD250,000.
As specified in a posting by Austan Goolsbee, the PERAB’s staff director
and chief economist, the report is meant to be informative rather than to draw
conclusions. Its intention is to aid discussion about the wide variety of tax
reform ideas in these areas.
For example, considering the complexity of US tax law, the subcommittee looked
at tax simplification options for families, such as the consolidation of family
credits and simplification of eligibility rules, and the clarification and improvement
of savings incentives. It also looked at simplifying the taxation of capital
gains.
Reviewing the background on tax compliance, the report contains a section on
possible improvements to voluntary compliance and a reduction to the tax gap,
including a harmonization of the employment tax rules for businesses and the
self-employed.
It provides an overview of corporate taxation, with suggestions for reducing
marginal corporate tax rates and increasing incentives for investment, and also
addresses international corporate tax issues.
“The PERAB was not tasked with providing its own policy recommendations
for the government,” Goolsbee added, “and, of course, given the
independence of the PERAB as a group of outside advisers, it is not a reflection
of administration ideas under consideration. The final report is an informative and important almanac of options for tax reform.”
“The report will also be submitted to the bipartisan National Commission
on Fiscal Responsibility and Reform as they continue to consider ways to address
our nation’s middle and long-term fiscal challenges and to achieve fiscal
sustainability,” he concluded.
The tax reform subcommittee received more than 600 serious submissions of tax
reform ideas from the public both in person and in writing or electronically
during their deliberations.
LAWANDTAX-NEWS.COM
