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Policymakers Should be Bold, Not Cold, Toward Replacing Current Tax System, Citizen Group Says
For Immediate Release October 18, 2005
(Alexandria, VA) - Today's outline of proposals from the President's Advisory Panel on Federal Tax Reform could amount to significant -- but hardly seismic -- changes in the federal tax system: that's the assessment of the 350,000-member National Taxpayers Union (NTU), which continues to support completely replacing the current tax law with a flat-rate income tax or national retail sales tax.
"Based on today's final public meeting, it appears the Panel's work will more closely reflect the thinking of 1986 rather than 1996," said NTU Vice President for Communications Pete Sepp, referring to Congress's Tax Reform Act of 1986 and the much bolder "Kemp Commission" tax reform outline proposed in 1996. "Under the Panel's still-evolving proposals, Americans could face a somewhat less burdensome tax filing process, but taxpayers would be left wondering how much better their own plight as well as the economy would be under truly fundamental reforms like a national retail sales tax or flat tax."
Sepp noted that while NTU wholeheartedly endorsed President Bush's decision to make tax reform a priority of his second term, the Panel's mission was made difficult, owing to the President's stipulation that any proposal endorsed by the commission must be "revenue neutral." The current Tax Code, despite its incredible inefficiencies, still generates revenue at an astounding pace. Federal tax receipts have risen by nearly 15 percent since last year alone. Since any reasonable plan - especially a national retail sales tax or flat tax -- would generate even faster revenue (and spending) growth, spending restraint, not revenue neutrality, is the crucial component of genuine tax reform that encourages accountable, limited government.
Last week NTU offered praise for the Panel's call to eliminate the Alternative Minimum Tax and shun a Value Added Tax, but criticized the decision to rule out a national retail sales tax system in place of the current Tax Code. Likewise, the Panel's latest findings are likely to get mixed reviews from many taxpayers. For example, permanent repeal of the gift tax and estate tax, along with consumer excise tax reforms, will apparently receive little consideration.
"Personal savings accounts, investment tax relief, and fewer brackets are potentially useful steps toward simplification, but as the 1986 tax reform demonstrated, change is often the only constant in the Tax Code," Sepp concluded. "That's why complete replacement of the tax laws, backed by Constitutional limits on Congress's power to raise tax burdens, is the only long-term solution for giving taxpayers the fairer and less burdensome system they deserve."
The non-partisan NTU was founded in 1969 to work for lower taxes and smaller government at all levels. Note: NTU's testimony 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.