Anticipating Bush’s Tax Panel Report

Anticipating Bush’s Tax Panel Report
Society Offers a Solution

Continued from the Home Page

If you haven’t read the New York State Society of CPAs’ proposed tax reform plan, this is the month to do so.

By no later than Sept. 30, President George W. Bush’s Advisory Panel on Federal Tax Reform is supposed to issue its final report on revenue-neutral options for overhauling the Internal Revenue Code.

It’s uncertain what the bipartisan group will proffer. (Published reports say that its members want to eliminate the Alternative Minimum Tax, but as of this writing, there was only speculation as to how they would recover the $1 trillion revenue loss estimated for the first 10 years of the AMT’s abrogation.) But we are hoping that those in the process have read the Society’s tax reform plan, the Simple Exact Transparent (SET) Tax, a report which was submitted to the panel during the public comment period.

The SET Tax is the synthesis of the expertise of the Society’s Committee on Practical Reform for the Tax System. Committee members, led by David A. Lifson, toiled over some of the most fundamental social and economic issues underpinning the current tax debate, to emerge with a proposal that tracks closely to one of the primary aims of Bush’s advisory panel.

According to its Web site (taxreformpanel.gov), any options the panel comes up with should simplify the tax laws to reduce the cost and burden of compliance.

Simplification is the very heart of SET. It reduces the plethora of deductions, credits and exemptions that complicate the current system to a single and comprehensible set of exclusions, applying one tax rate, to be determined by the government, on all income. As Lifson told the Society’s board last April, under SET, “everyone reports income—every single bit of it—but in a simple way.” While some describe SET as a flat tax, it allows for a single personal exclusion, and for lawmakers to determine what all the other exclusions will be, making SET different from and less rigid than the Flat Tax.

SET would make it obvious to taxpayers exactly what is being taxed and what they will owe. It would demystify a system whose complexity can alienate even the savviest taxpayers from the government that is taking their money.

Society members have taken the SET Tax gospel of simplicity and transparency to the streets, in meetings with members of Congress and in interviews with the press. I believe it is important, regardless of what the tax panel reports at the end of the month, for all members to be aware of the SET Tax proposal and to join the reform effort by telling the Society what you think.

The complexity and problems besetting the Internal Revenue Code will not vanish on Sept. 30, obviously. There will remain a need for the president and Congress to respond to the group’s recommendations. This will give the members of the Society more opportunities to speak out on an issue crucial to anyone who has ever had to file with the IRS.

Read the SET proposal report. You can find links to the full version, a digested version and an FAQ on the Society’s Web site at www.nysscpa.org underneath the “For Your Info” banner. Feel free to send your thoughts on the proposal to the Society by e-mail.