AMERICANS FOR PROSPERITY RELEASES TAX REFORM PROPOSAL
Today Americans for Prosperity (AFP), the nation’s largest grassroots advocate for economic freedom, filed a detailed proposal with the Senate Finance and House Ways and Means Committees to assist Chairmen Baucus and Camp in their goal of comprehensive tax reform. AFP’s proposal coincides with Tax Day, the deadline the IRS traditionally imposes on individuals to file their tax returns.
AFP’s proposal seeks “to create a simple, flat and neutral tax code with the fewest distortive, secondary effects on the economy. Areas that are particularly ripe for reform include: the treatment of savings and investment on both the personal and corporate side, the treatment of international corporate earnings, energy tax provisions that seek to pick winners and losers and numerous itemized deductions in the personal tax code,” an excerpt from the paper notes.
“As the economy continues to stagnate, it’s time for Congress to clean up the unnecessarily complex and distortive tax code by focusing on simplicity and neutrality,” said AFP Director of Policy James Valvo. “Over time we’ve seen that more and more provisions get injected into the code and that this complexity weighs down the economy as compliance costs mount and economic decisions are distorted in an effort to chase preferential tax treatment.”
A few of the recommendations include:
- Neutrality: allow full first-year deduction of business expenses and remove caps on retirement-account contributions to create a neutral tax base that removes the current disincentive to save and invest,
- Debt and Equity: resolve the differential treatment of debt and equity financing in the corporate code that encourages leveraging and discourages equity investment,
- Energy: end all production tax subsidies, including: the marginal well credit, enhanced oil recovery credit and wind production credit,
- International: switch to territorial system to restore tax competitiveness, and
- Individual Code Provisions: end state and local taxes-paid deduction, end state and municipal bond interest exclusion, and reform the mortgage interest deduction.
“Ending these deductions, credits, and exclusions without simultaneously lowering rates would be a tax increase, and AFP would likely oppose such a proposal. However, comprehensive reform offers an opportunity for Congress to clean up the code and reinvigorate economic growth all in one fell swoop, without increasing the net burden on taxpayers,” Valvo concluded by quoting from the paper.