(Alexandria, VA) -- Americans hoping for a bolder, simpler alternative to the nation's current tax maze will be left dissatisfied with the tentative plan outlined late yesterday by the President's tax reform commission, according to the 350,000-member National Taxpayers Union (NTU). Although the citizen group commended the panel for advocating repeal of the Alternative Minimum Tax and ruling out a European-style Value Added Tax, NTU called the apparent decision to oppose a national retail sales tax "premature and poorly-reasoned."
"The Presidential panel's latest exercise in consensus-building could amount to confusion-building for a Tax Code that many Americans are finding increasingly difficult to comprehend," said NTU President John Berthoud. "Scrapping the current law in favor of a national retail sales tax or a flat-rate income tax is the proper focus for any far-sighted tax reform initiative. Piecemeal efforts won't significantly reduce the tremendous financial and time burdens on most taxpayers, but they will embolden narrow-visioned special interests to tear the proposals down, bit by bit."
On March 18, NTU submitted comments to the President's Advisory Panel on Federal Tax Reform, recommending short-term steps such as a permanent ban on Internet access taxes as well as predatory taxes on e-commerce, simplification and reductions in telecommunications, travel, and consumer excise taxes, and repeal of the dreaded Alternative Minimum Tax. Over the long term, however, NTU called for complete replacement of the current tax system, preferably with a retail-level national sales tax (such as the "FairTax" legislation, H.R. 25 and S. 25).
While Berthoud praised the panel's evolving blueprint for ditching the Alternative Minimum Tax as well as reportedly delivering investment tax relief, he cautioned that "half-baked plans won't be palatable to Americans who are hungry for a real change in the tax system." He pointed out that contrary to concerns among the panelists, a national retail sales tax could be properly designed to protect lower-income households. For example, the FairTax provides for a universal sales tax "pre-bate" on purchases up to the poverty line, based upon household size.
"Curtailing popular deductions for mortgage interest and health care only makes political sense when it's done as part of a new law that lowers the tax rate and simplifies the tax base," Berthoud concluded. "If the nine members of the President's panel choose a less ambitious path, then the 44 cosponsors of the FairTax must lead the way for adoption of a better system that millions of Americans seek."
The non-partisan NTU was founded in 1969 to work for lower taxes and smaller government at all levels. Note: NTU's comments to the panel, along with numerous studies and commentaries on the national retail sales tax and the flat tax, are available at www.ntu.org.