With tax day upon us, many Americans are left cursing the tax code - both its complexity and how much of our money it takes. In honor of the day, Ryan Ellis, director of tax policy at Americans for Tax Reform, composed a list of the top ten tax reforms Washington could implement.
1. Enact a 15% flat tax for businesses and families. All income would be taxed once (and only once) at this one low, flat rate.
2. Abolish the AMT. It’s not fair to make Americans calculate their taxes twice, and then bill them for the higher amount. If the “Clinton AMT” were abolished (the part of the AMT caused by the Clinton tax hike), 40% of the problem would be solved.
3. Cut the corporate income tax. It’s currently 35% (the second-highest in the developed world). We should at least cut it to 25% (the average rate of our European competitors).
4. End the double taxation of savings. This can be done either by bringing the 15% capital gains and dividends tax to 0%, or further expanding and simplifying tax-free savings accounts like IRAs.
5. Kill the death tax. In 2010, the death tax is 0%. In 2011, it’s up to 55% on nest eggs exceeding $1 million.
6. Allow all businesses to expense purchases in year one. Under current law, most businesses have to slowly deduct purchases over many years, despite having to pay for them in year one.
7. End the marriage penalty. It’s not fair that many co-habitating couples pay a lower combined tax bill than their happily married counterparts.
8. Cut the excise tax rate on liquor. Why is it higher than taxes on wine or beer? While they’re at it, Congress should cut the tax rate on cigarettes so that it’s no higher than cigars.
9. Allow all Americans to deduct the cost of their health insurance premiums, whether they get coverage from their job or their own wallet.
10. Set up tax-free personal employment accounts to replace the federal unemployment insurance system. Workers could take these accounts with them from job to job. These accounts would tide workers over when they were between jobs, without the bureaucracy.
