The President's Economic Recovery Advisory Board released their report examining various opportunities for reforming the tax system in the United States of America. PERAB held a conference call today to release their report, to summarize their concerns, and then voted to send the report to President Obama for review. The tax reform report is available for download from the Whitehouse Web site (126 pages in pdf format).
Paul Volcker, chairman of PERAB, said that the United States has a "very complicated tax system." The board looked at a number of alternatives for making taxation simpler, making it easier for taxpayers to follow the tax rules, and for reforming taxation for individuals and businesses. Board member Martin Feldstein emphasized that the report is about "discussing a series of options" that could be available for legislators to implement in an effort to help alleviate the "enormous complexity of the tax law for the typical taxpayer."
The PERAB report analyzes recommendations in four major areas: changes to simplify the taxation for individuals, governmental recommendations for ensuring that taxpayers are complying with the tax rules and paying an accurate amount of tax, reforming the tax rules for corporations, and recommendations for changing how the United States deals with the international aspect of corporate finances.
On the individual side, "the report analyzes an array of options for making tax time simpler for ordinary families by merging tax credits for children, child care, education and other family expenses, or at least harmonizing eligibility requirements," reports the Washington Post.
The last time we had any serious consideration for tax reform was in 2005 when President Bush appointed a panel of advisors to come up with simplified tax systems. The final reports from the 2005 tax reform panel are archived at the University of North Texas library and on Professor Paul Caron's TaxProf Blog. The 2005 panel outlined two possibilities for dramatically simplifying the taxation of individuals. Those recommendations were never implemented, which hearkens back to what seems to be a revealing comment made by the panel. In a letter to the Treasury Secretary outlining the panel's recommendations the committee said, "The effort to reform the tax code is noble in its purpose, but it requires political willpower."
The same comment can be repeated here in 2010. There is a strong suspicion that recommendations from Volcker's tax reform panel might not fare any better.
"This report is a huge missed opportunity," writes Howard Gleckman, a senior research associate at the Tax Policy Center. "Obama might have used this exercise to jump-start a debate over fundamental tax reform. Instead, the report does nothing to fill the policy vacuum that is being filled by an argument over what to do about the decade-old Bush tax cuts." (TaxVox) Political commentators have been quick to note the limitations placed upon the PERAB tax panel (National Journal, TaxVox ). Still, having a limited mandate doesn't excuse us for taking the issues raised by PERAB lightly.
More about:
- Profile of former Federal Reserve Chairman Paul Volcker
- Who's part of Obama's Economic Advisory Panel
- Obama tax reform panel report released from Don't Mess With Taxes
- Coverage of the tax reform report from TaxProf Blog
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