House Ways and Means Committee bill incorporates a number of incremental steps toward
fundamental tax reform.
WASHINGTON – Today, Americans for Tax Reform (ATR), the nation\’s leading taxpayer advocacy organization, applauded House Committee on Ways and Means members for passing its version of President Bush\’s tax relief plan.
The committee plan moves in tandem with ATR\’s Five Easy Steps toward a flat tax, as discussed in the last issue of ATR\’s quarterly newsletter, The Tax Reformer.
The Five Easy Steps toward a Flat Tax first require eliminating all forms of double taxation on income. The first step, now concluded, ended the Death Tax. Future steps will see the elimination of the Alternative Minimum Tax (AMT), the repeal of the capital gains tax, and the introduction of universal Individual Retirement Accounts (IRAs) and full business expensing. From there, policy makers can move toward one flat income tax rate.
In tandem with the Five Easy Steps, the House committee plan equalizes capital gains and dividends taxation to the same rates and cuts the rates to 5% for lower incomes and 15% for higher incomes. It accelerates capital depreciation for businesses from 30 to 50% (halfway to full business expensing). It expands the amount available for small business expensing. It moves toward a phase-out of the double taxation of dividend income. Finally, the bill accelerates planned future tax cuts to 1 January 2003.
"Fundamental tax reform is a big goal, but that doesn\’t mean it\’s unachievable," said taxpayer advocate Grover Norquist, who heads ATR in Washington. "The House Committee\’s bill could be easily labeled the \’Five Steps toward Reform\’ legislation or something like that, because it moves in tandem with our reform efforts," he continued.
Observers expect the bill to come to a vote in the full House by the end of this week.
"By taking your time, setting clear goals and setting reasonable timelines, you can achieve anything in American politics," continued Norquist. "The Death Tax, once thought a permanent fixture of American tax law, is now a dead fish. The other forms of double taxation are next, and the House Ways and Means Committee bill is a good step in that direction."