2011ABA-TAX-forman

Document Sample
2011ABA-TAX-forman Powered By Docstoc
					Tax Reform and Deficit
      Reduction
        Professor Jon Forman
       University of Oklahoma

      Slides for a panel of the
Comm. on Tax Policy and Simplification
      ABA Section of Taxation
          Washington, DC
            May 6, 2011
Overview
 The Budget Outlook
   Short-term
   Long-term
 Taxes
   The Current Tax System
   Recent Tax Reform Proposals




                                  2
  Short-Term:
  Projected Budget Totals
Budget Totals, $billions                                        2011            2012-2021
Receipts                                                      $2,228              $39,084
Outlays                                                       $3,708              $46,055
  Deficit                                                     $1,480              $ 6,971
Budget Totals, % GDP
Receipts                                                       14.8%                      19.9%
Outlays                                                        24.7%                      23.5%
  Deficit                                                       9.8%                       3.6%
Public Debt, % GDP                                             69.4%                      75.3%
Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2011 to 2021      3
(January 2011), http://www.cbo.gov/ftpdocs/120xx/doc12039/01-26_FY2011Outlook.pdf.
Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2011 to 2021   4
(January 2011), http://www.cbo.gov/ftpdocs/120xx/doc12039/01-26_FY2011Outlook.pdf.
5
Congressional Budget Office, Four Observations about the Federal Budget (March 7, 2011), at 6   6
http://www.cbo.gov/ftpdocs/120xx/doc12087/CBO_Presentation_to_NABE_3-7-11.pdf.
Congressional Budget Office, Four Observations about the Federal Budget (March 7, 2011), at 7   7
http://www.cbo.gov/ftpdocs/120xx/doc12087/CBO_Presentation_to_NABE_3-7-11.pdf.
Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2011 to 2021   8
(January 2011), http://www.cbo.gov/ftpdocs/120xx/doc12039/01-26_FY2011Outlook.pdf.
9
10
11
Congressional Budget Office, Four Observations about the Federal Budget (March 7, 2011), at 8   12
http://www.cbo.gov/ftpdocs/120xx/doc12087/CBO_Presentation_to_NABE_3-7-11.pdf.
U.S. Department of the Treasury, Financial Management Service, A Citizen’s Guide to the   13
Financial Report of the United States Government (2009).
Congressional Budget Office, The Long-Term Budget Outlook (Revised August 2010), at 5,   14
http://www.cbo.gov/ftpdocs/115xx/doc11579/06-30-LTBO.pdf.
Factors Explaining Future Federal
Spending on Medicare, Medicaid, and
Social Security (percentage of GDP)




Congressional Budget Office, The Long-Term Budget Outlook (June 2009), at 12 (Box 1-2).
Taxes
 Overview of the federal tax system
 Recent tax reform proposals




                                       16
Joint Committee on Taxation, Present Law and Historical Overview of the Federal Tax System   17
(JCX-1-11), January 18, 2011, at 71, www.jct.gov.
  Proposed Budget Receipts
Receipts, $billions                                               2011                     2014
Individual income taxes                                            998                    1,671
Corporation income taxes                                           279                      398
Payroll taxes                                                      819                    1,092
Excise taxes                                                         73                      86
Estate and gift taxes                                                 11                     14
Custom duties and other receipts                                     47                      75

    Total receipts                                               2,228                    3,442
    GDP                                                      $15,034                  $17,258
    Receipts, % GDP                                            14.8%                      19.9%
Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2011 to 2021      18
(January 2011), http://www.cbo.gov/ftpdocs/120xx/doc12039/01-26_FY2011Outlook.pdf.
Center on Budget and Policy
Priorities, Top Ten Tax Charts
(April 14, 2011),
http://www.offthechartsblog.org
/top-ten-tax-charts/.


                          19
Joint Committee on Taxation, Present Law and Historical Overview of the Federal Tax System     20
  Joint Committee on Taxation, Present Law
(JCX-1-11), January 18, 2011, www.jct.gov. and Historical Overview of the Federal Tax System
  (JCX-1-11), January 18, 2011, at 70, www.jct.gov.
                                                     U.S. Payroll Tax Rates: Selected Years
                                                20
Percent paid jointly by employee and employer




                                                18

                                                16

                                                14

                                                12
                                                                                             Medicare
                                                10
                                                                                             Social Security
                                                8

                                                6

                                                4

                                                2

                                                0
                                                        1940     1960          1980   2010
                                                                        Year



                                                                                                 21
Tax-to-GDP ratio, 2008




                                          22
OECD Tax Database, http://www.oecd.org.
Edward D. Kleinbard, Muddling Through the Budget Crisis (January 6, 2011); OECD Tax   23
Database, http://www.oecd.org.
Joint Committee on Taxation, Present Law and Historical Overview of the Federal Tax System   24
(JCX-1-11), January 18, 2011, at 72, www.jct.gov.
Congressional Budget Office, Trends in Federal Tax Revenues and Rates (December 2, 2010), at   25
10, http://finance.senate.gov/imo/media/doc/120210DEtest.pdf.
Center on Budget and Policy
Priorities, Top Ten Tax Charts
(April 14, 2011),
http://www.offthechartsblog.org
/top-ten-tax-charts/.


                          26
Joint Committee on Taxation, Present Law and Historical Overview of the Federal Tax System   27
(JCX-1-11), January 18, 2011, at 66, www.jct.gov.
Center on Budget and
Policy Priorities, Top Ten
Tax Charts (April 14,
2011),
http://www.offthecharts
blog.org/top-ten-tax-
charts/.



                     28
Top 10 Income Tax Expenditures,
2012 (Billions)
Health insurance exclusion                                                                $184
Mortgage interest deduction                                                                99
401(k) plans                                                                               68
Step-up of basis at death                                                                  61
Exclusion of net imputed rental income                                                     51
Deductible nonbusiness state and local taxes other                                         49
than on houses
Employer plans                                                                             45
Charitable contrib. (other than health & education)                                        43
Capital gains (except agriculture, timber, iron, coal)                                     38
Exclusion of interest on tax-exempt bonds                                                  37
2012 Federal Budget, Analytical Perspectives, Chapter 17, Tax Expenditures, Table 17-3,      29
http://www.whitehouse.gov/omb/budget/Analytical_Perspectives.
Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2011 to 2021   30
(January 2011), http://www.cbo.gov/ftpdocs/120xx/doc12039/01-26_FY2011Outlook.pdf.
Office of Management and the Budget, A New Era of Responsibility: Renewing America’s   31
Promise (2009).
   Productivity and Real Income




20 Facts About U.S. Inequality that Everyone Should Know,   32
http://stanford.edu/group/scspi/cgi-bin/facts.php.
   Rising Poverty




U.S. Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: 2009,   33
(Current Population Report No. P60-238, September 2010), http://www.census.gov.
Congressional Budget Office, Trends in Federal Tax Revenues and Rates (December 2, 2010), at   34
24, http://finance.senate.gov/imo/media/doc/120210DEtest.pdf.
Rising Inequality
               Figure 3. Ratio of Average Household Income of the Top 5 and 20 Percent of Households to the
               Average Household Income of the Bottom 20 Percent of Households, 1970-2009
        30
                                                                                                                          26.1         25.5
                                                                                                           24.6
        25                  Top 20%/bottom 20%
                                                                                            22.7
                            Top 5%/bottom 20%

        20                                                                    19.1
                                                               17.0
                   16.2
                                    14.5        14.7                                                                 14.8           14.8
Ratio




        15                                                                              13.2           13.8
                                                           11.3          11.9
               10.6           9.8           10.2
        10


         5


         0
                 1970           1975          1980           1985          1990           1995           2000          2005          2009

                                                                          Year
             Source: U.S. Census Bureau, table IE-3, http://www.census.gov/hhes/www/income/data/historical/inequality/index.html.




                                                                                                                                              35
Congressional Budget Office, Trends in Federal Tax Revenues and Rates (December 2, 2010), at   36
15, http://finance.senate.gov/imo/media/doc/120210DEtest.pdf.
37
  Shares of Total Business Returns
  and Net Income, 1980-2007
                                             1980           1990        2000   2007
 S Corporations
       Returns                                   4%             8%      11%    12%
       Net Income                                1%             8%      14%    14%
 Partnerships
       Returns                                 11%              8%       8%    10%
       Net Income                                3%             3%      18%    23%
 Sole Proprietorships
       Returns                                 69%            74%       72%    72%
       Net Income                              17%            26%       15%    10%
 C Corporations
       Returns                                 17%            11%        9%     6%
       Net Income                             80%             62%       53%    53%
                                                                                      38
Internal Revenue Service, Statistics of Income, www.irs.gov/taxstats.
   Expired Tax Provisions 2010
        First-time homebuyer credit
        Making work pay credit
        Build America Bonds
        Estate and gift tax regime for 2010




                                                                                              39
Joint Committee on Taxation, List of Expiring Federal Tax Provisions, 2010-2020 (JCX-2-11),
January 21, 2011, www.jct.gov.
   Expiring Tax Provisions 2011
    Tax credit for research and
     experimentation expenses
    Increased AMT exemption amount
    Increase in expensing to
     $500,000/$2,000,000
    Above-the-line deduction for qualified
     tuition and related expenses
    Temporary 2% payroll tax cut
                                                                                              40
Joint Committee on Taxation, List of Expiring Federal Tax Provisions, 2010-2020 (JCX-2-11),
January 21, 2011, www.jct.gov.
   Expiring Tax Provisions 2012
    Most 2001 and 2003 tax cuts
             35% maximum rate
             10% minimum rate
             $1,000 child tax credit
             15% capital gain and dividend rates
    Expanded earned income tax credit
    American opportunity tax credit
    Reduced estate and gift taxes
                                                                                              41
Joint Committee on Taxation, List of Expiring Federal Tax Provisions, 2010-2020 (JCX-2-11),
January 21, 2011, www.jct.gov.
Center on Budget and Policy
Priorities, Top Ten Tax Charts
(April 14, 2011),
http://www.offthechartsblog.org
/top-ten-tax-charts/.


                          42
Recent Tax Reform Proposals
 President’s Economic Recovery Advisory
  Board, The Report on Tax Reform
  Options: Simplification, Compliance,
  and Corporate Taxation (August 2010).
 National Commission on Fiscal
  Responsibility and Reform, The Moment
  of Truth (December 2010).
 Bipartisan Policy Center, Restoring
  America’s Future (November 2010).
   Co-Chairs: Pete Domenici & Alice Rivlin
                                              43
Recent Tax Reform Proposals
 Bipartisan Tax Fairness and
  Simplification Act of 2011 (2011).
   Senators Ron Wyden and Dan Coats
 Rep. Paul Ryan, The Roadmap Plan
  (2010).
 National Taxpayer Advocate, 2010
  Annual Report to Congress (December
  31, 2010).
 President Obama’s FY2012 Budget
                                        44
Recent Tax Reform Proposals
 President Obama, Framework for Shared
  Prosperity and Shared Fiscal
  Responsibility (April 13, 2011).
 See also:
   Choosing The Nation’s Fiscal Future
    (National Research Council & National
    Academy of Public Administration 2010)
   The Peterson-Pew Commission on Budget
    Reform, Red Ink Rising: A Call to Action to
    Stem the Mounting Federal Debt (2009).
                                                  45
   Principles of Sound Tax Policy
       Simplicity
       Transparency
       Neutrality
       Stability
       No Retroactivity
       Broad Bases and Low Rates


                                                             46
Tax Foundation, The Principles of Sound Tax Policy ,
http://www.taxfoundation.org/publications/show/25982.html.
More Principles of Sound
Tax Policy
 Distribution matters
   A just distribution of economic resources
   Intergenerational justice/ Deficits
 Behavioral consequences matter
     Encourage work and savings
     Marriage penalties and bonuses
     Keep effective rates as low as possible
     Growth and a stronger dollar


                                                47
Tax Base
   Income
   Consumption
   Earnings
   Wealth




                  48
  PERAB: Simplification
  Options
   Simplification for Families
         Consolidate Family Credits and Simplify
          Eligibility Rules
         Simplify and Consolidate Tax Incentives
          for Education




PERAB, The Report on Tax Reform Options: Simplification, Compliance, and Corporate Taxation,   49
http://www.whitehouse.gov/sites/default/files/microsites/PERAB_Tax_Reform_Report.pdf.
  PERAB: Simplification
  Options
   Simplify Savings and Retirement
    Incentives
         Consolidate Retirement Accounts
         Integrate IRA and 401(k)-type
          Contribution Limits and Disallow
          Nondeductible Contributions
         Consolidate Non-Retirement Savings
         Reduce Retirement Account Leakage
         Simplify Taxation of Social Security
PERAB, The Report on Tax Reform Options: Simplification, Compliance, and Corporate Taxation,   50
http://www.whitehouse.gov/sites/default/files/microsites/PERAB_Tax_Reform_Report.pdf.
  PERAB: Simplification
  Options
   Simplify Taxation of Capital Gains
         Harmonize Rules and Tax Rates for
          Long-Term Capital Gains
         Simplify Capital Gains Tax Rate Structure
         Limit or Repeal Section 1031 Like-Kind
          Exchanges
         Capital Gains on Principal Residences



PERAB, The Report on Tax Reform Options: Simplification, Compliance, and Corporate Taxation,   51
http://www.whitehouse.gov/sites/default/files/microsites/PERAB_Tax_Reform_Report.pdf.
  PERAB: Simplification
  Options
   Simplify Tax Filing
         The Simple Return
         Data Retrieval
         Raise the Standard Deduction and
          Reduce the Benefit of Itemized
          Deductions
   Simplification for Small Business
   The Alternative Minimum Tax

PERAB, The Report on Tax Reform Options: Simplification, Compliance, and Corporate Taxation,   52
http://www.whitehouse.gov/sites/default/files/microsites/PERAB_Tax_Reform_Report.pdf.
  PERAB: Compliance Options
   Dedicate More Resources to
    Enforcement and Enhance
    Enforcement Tools
   Increase Information Reporting and
    Source Withholding
   Clarify the Definition of a Contractor



PERAB, The Report on Tax Reform Options: Simplification, Compliance, and Corporate Taxation,   53
http://www.whitehouse.gov/sites/default/files/microsites/PERAB_Tax_Reform_Report.pdf.
  PERAB: Corporate Tax
  Reform
   Reduce Marginal Corporate Rates
   Broaden the Corporate Tax Base
   Eliminate or Reduce Tax Expenditures
         Eliminate the Domestic Production
          Deduction
         Eliminate or Reduce Accelerated
          Depreciation
         Eliminate Other Tax Expenditures

PERAB, The Report on Tax Reform Options: Simplification, Compliance, and Corporate Taxation,   54
http://www.whitehouse.gov/sites/default/files/microsites/PERAB_Tax_Reform_Report.pdf.
  PERAB: International
  Corporate Tax Issues
   Option 1: Move to a Territorial
    System
   Option 2: Move to a Worldwide
    System with a Lower Corporate Tax
    Rate
   Option 3: Limit or End Deferral with
    the Current Corporate Tax Rate
   Option 4: Retain the Current System
    but Lower the Corporate Tax Rate
PERAB, The Report on Tax Reform Options: Simplification, Compliance, and Corporate Taxation,   55
http://www.whitehouse.gov/sites/default/files/microsites/PERAB_Tax_Reform_Report.pdf.
  President’s Fiscal Commission
   Co-chairs: Alan Simpson & Erskine Bowles
   Designed to raise 21% of GDP
   Individual tax rates of 12, 22, and 28%
   Eliminate the AMT
   Eliminate the phase-out of personal
    exemptions & limits on itemized deductions
   Eliminate itemized deductions but retain
    standard deduction & personal exemptions
   Tax capital gains & dividends as ordinary
    income
The National Commission on Fiscal Responsibility and Reform, The Moment of Truth (December   56
2010), http://www.fiscalcommission.gov; Tax Policy Center, http://www.taxpolicycenter.org.
  President’s Fiscal Commission
   Eliminate tax expenditures except:
         child credit and earned income tax credit
         mortgage interest deduction—replace
          with 12% credit; $500,000 mortgage cap
         cap and phase out the exclusion for
          employer-sponsored health care
         charitable giving deduction—replace with
          12% credit for contributions over 2%
          AGI

The National Commission on Fiscal Responsibility and Reform, The Moment of Truth (December   57
2010), http://www.fiscalcommission.gov.
  President’s Fiscal Commission
   Eliminate tax expenditures except:
         exclusion of interest on state and
          municipal bonds—tax interest only on
          newly-issued bonds
         retirement savings—maintain basic
          preferences, but consolidate retirement
          accounts and cap annual tax-preferred
          contributions at lower of $20,000 or 20
          percent of income; expand savers’ credit
         defined benefit pensions
The National Commission on Fiscal Responsibility and Reform, The Moment of Truth (December   58
2010), http://www.fiscalcommission.gov.
  President’s Fiscal Commission
   Eliminate corporate tax expenditures
    & reduce corporate tax rate to 28%
   Territorial tax system for active
    foreign-source income
   Increase Social Security taxable wage
    base to 90% of wages, by 2050
   Increase the gasoline excise tax on
    gasoline by 15¢ per gallon

The National Commission on Fiscal Responsibility and Reform, The Moment of Truth (December   59
2010), http://www.fiscalcommission.gov.
  Bipartisan Policy Center
   Co-Chairs: Pete Domenici & Alice
    Rivlin
   one-year payroll tax holiday in 2011
    to help stimulate economic recovery
   individual tax rates: 15% on the 1st
    $50,000 of taxable income ($100,000
    for married couples, 27% on excess
   eliminate the AMT

Bipartisan Policy Center, Restoring America’s Future (November 2010),                   60
http://bipartisanpolicy.org/sites/default/files/FINAL%20DRTF%20REPORT%2011.16.10.pdf.
  Bipartisan Policy Center
   Eliminate tax expenditures:
        exclusion from tax of the inside buildup
         of life insurance and deferred annuities
        credits and deductions for higher
         education expenses
        credit for child & dependent care
        exclusion from income of benefits under
         Section 125 cafeteria plans
        foreign earned income exclusion

Bipartisan Policy Center, Restoring America’s Future (November 2010),                   61
http://bipartisanpolicy.org/sites/default/files/FINAL%20DRTF%20REPORT%2011.16.10.pdf.
  Bipartisan Policy Center
   Exempt the first $1,000 of net long-
    term gains from taxation (indexed for
    inflation)
        tax any additional long-term gains and
         all qualified dividends as ordinary income
        include in income unrealized capital
         gains at death
   Cap and phase out the exclusion for
    employer-sponsored health care
Bipartisan Policy Center, Restoring America’s Future (November 2010),                   62
http://bipartisanpolicy.org/sites/default/files/FINAL%20DRTF%20REPORT%2011.16.10.pdf.
  Bipartisan Policy Center
   Eliminate deduction for state and
    local taxes
   Replace charitable contributions and
    mortgage interest deductions with
    15% refundable credits
   Retain medical deduction



Bipartisan Policy Center, Restoring America’s Future (November 2010),                   63
http://bipartisanpolicy.org/sites/default/files/FINAL%20DRTF%20REPORT%2011.16.10.pdf.
  Bipartisan Policy Center
   Replace the standard deduction,
    personal exemptions, head of
    household filing status, the child tax
    credit, and the earned income tax
    credit with two refundable credits:
        $1,600 for each dependent child
        an earnings credit equal to 21.3 percent
         of the first $20,300 of earnings


Bipartisan Policy Center, Restoring America’s Future (November 2010),                   64
http://bipartisanpolicy.org/sites/default/files/FINAL%20DRTF%20REPORT%2011.16.10.pdf.
  Bipartisan Policy Center
   Tax all Social Security benefits,
    eliminate the elderly credit & provide
    2 new credits:
        7.5% of Social Security benefits
        15% of the current standard deduction
         for individuals age 65 or older
   Increase Social Security taxable wage
    base to 90% of wages

Bipartisan Policy Center, Restoring America’s Future (November 2010),                   65
http://bipartisanpolicy.org/sites/default/files/FINAL%20DRTF%20REPORT%2011.16.10.pdf.
  Bipartisan Policy Center
   Impose a 6.5% broad-based
    consumption tax
   Impose an excise tax 1¢/ounce on
    sugar-sweetened beverages
   Raise the excise tax on alcoholic
    beverages to 25¢/ounce
   Estate tax: $3.5 million exemption
    and 45% maximum tax rate

Bipartisan Policy Center, Restoring America’s Future (November 2010),                   66
http://bipartisanpolicy.org/sites/default/files/FINAL%20DRTF%20REPORT%2011.16.10.pdf.
  Bipartisan Policy Center
   Corporate taxes
        reduce the corporate rate to 27%
        eliminate many tax expenditures:
              domestic production deduction
              research and experimentation credit
              accelerated depreciation for rental housing
        retain deferral of income for controlled
         foreign corporations


Bipartisan Policy Center, Restoring America’s Future (November 2010),                   67
http://bipartisanpolicy.org/sites/default/files/FINAL%20DRTF%20REPORT%2011.16.10.pdf.
    Wyden-Coats Tax Act
     Like the Tax Reform Act of 1986
     Individuals
          top tax rate of 35%
          standard deduction of $15,000 ($30,000
           for couples)
          repeal AMT
          35% exclusion for capital gains and
           qualified dividends
          eliminate lots of tax breaks
Senator Ron Wyden, The Bipartisan Tax Fairness and Simplification Act of 2011 (2011),          68
http://wyden.senate.gov/issues/legislation/details/?id=fb5b603a-ed94-48a8-8ff1-c220c1052b3f.
    Wyden-Coats Tax Act
     Corporate & business
          replaces the graduated corporate rate
           structure with a flat rate of 24%
          eliminates many business tax breaks
          allow unlimited expensing of equipment
           and inventories for small businesses




Senator Ron Wyden, The Bipartisan Tax Fairness and Simplification Act of 2011 (2011),          69
http://wyden.senate.gov/issues/legislation/details/?id=fb5b603a-ed94-48a8-8ff1-c220c1052b3f.
  Rep. Ryan’s Roadmap
   Designed to raise 19% of GDP
   Pay income taxes through existing
    law, or
   Through a highly simplified code with
    virtually no tax breaks
        10% on the first $50,000 ($100,000 for
         couples), 25% on the rest
        $39,000 standard deduction & personal
         exemptions for a family of 4
Paul Ryan, The Roadmap Plan (2010), http://www.roadmap.republicans.budget.house.gov.   70
  Rep. Ryan’s Roadmap
        eliminate the AMT
        eliminate taxes on interest, capital gains,
         and dividends
   Eliminate the estate tax
   Replace the corporate income tax
    with a border-adjustable business
    consumption tax of 8.5%
   See also House Committee on
    Budget, The Path to Prosperity (2011)
Paul Ryan, The Roadmap Plan (2010), http://www.roadmap.republicans.budget.house.gov.   71
  National Taxpayer Advocate
   Repeal the AMT
   Consolidate the family tax provisions
   Improve other provisions relating to
    taxation of the family unit
   Consolidate education savings
    incentives
   Consolidate retirement savings
    incentives
National Taxpayer Advocate, 2010 Annual Report to Congress (December 31, 2010),              72
http://www.taxpayeradvocate.irs.gov/Media-Resources/Annual-Report-To-Congress-Full-Report.
  National Taxpayer Advocate
   Simplify worker classification
    determinations
   Eliminate (or reduce incentives for
    lawmakers to enact tax sunsets
   Eliminate (or simplify) phase outs
   Streamline the penalty regime



National Taxpayer Advocate, 2010 Annual Report to Congress (December 31, 2010),              73
http://www.taxpayeradvocate.irs.gov/Media-Resources/Annual-Report-To-Congress-Full-Report.
  President Obama: Reform
  Corporate & Individual Tax
   “I’m asking Democrats and Republicans to
    simplify the system. Get rid of the loopholes.
    Level the playing field. And use the savings
    to lower the corporate tax rate for the first
    time in 25 years – without adding to our
    deficit. It can be done.”
   “In fact, the best thing we could do for all
    Americans is to simplify the individual tax
    code. This will be a tough job, but members
    of both parties have expressed interest in
    doing this, and I am prepared to join them.”
Text of President Barack Obama’s State of the Union Address ,   74
http://www.politico.com/news/stories/0111/48181.html.
  President Obama’s 2012
  Budget
   Extend the Earned Income Credit
   Expand the Dependent Care Credit
   Extend American Opportunity Credit
   Tax Dividends and Net Long-Term
    Capital Gains at a 20-Percent Rate for
    Upper-Income Taxpayers
   Reduce the Value of Certain Tax
    Expenditures for Upper-Income
U.S. Department of the Treasury, General Explanations of the Administration’s Fiscal Year 2012   75
Revenue Proposals (February 2011), http://www.treasury.gov/.
  President Obama’s 2012
  Budget
   Enhance and Make Permanent the
    Research and Experimentation (R&E)
    Tax Credit
   Reform & Extend Build America Bonds
   Reform Treatment of Financial
    Institutions and Products
   Reinstate Superfund Taxes
   Reform U.S. International Tax System
U.S. Department of the Treasury, General Explanations of the Administration’s Fiscal Year 2012   76
Revenue Proposals (February 2011), http://www.treasury.gov/.
  President Obama’s 2012
  Budget
       Eliminate Oil and Gas Preferences
       Eliminate Coal Preferences
       Expand Information Reporting
       Improve Compliance by Businesses
         Require Greater Electronic Filing
         Worker Classification
   Strengthen Tax Administration
   Expand Penalties
U.S. Department of the Treasury, General Explanations of the Administration’s Fiscal Year 2012   77
Revenue Proposals (February 2011), http://www.treasury.gov/.
  President Obama’s Framework for
  Shared Prosperity and Shared Fiscal
  Responsibility




The White House, http://www.whitehouse.gov/winning-the-future/fiscal-framework.   78
  President Obama’s Framework:
  another 12-year estimate: $5.3T
   Restore high-bracket tax rates to Clinton-era
    levels: $1T
   Cut tax-expenditure spending through the tax
    code: $1T
   Cut health care spending: $0.5T
   Cut other mandatory spending by: $0.4T
   Cut security spending: $0.4T
   Cut non-security discretionary spending: $0.8T
   Those reductions will carry with them a
    reduction in net interest of: $1.2T

Brad DeLong, http://delong.typepad.com/sdj/2011/04/the-obama-deficit-reduction-   79
framework.html.
  President Obama’s Framework:
  Tax Reform
   $3 of spending cuts and interest
    savings for every $1 from tax reform
    that contributes to deficit reduction
   comprehensive tax reform to produce
    a system which is fairer, has fewer
    loopholes, less complexity, and is not
    rigged in favor of those with lawyers
    and accountants to game it.

The White House, Fact Sheet: The President’s Framework for Shared Prosperity and Shared   80
Fiscal Responsibility (April 13, 2011), www.whitehouse.gov.
  President Obama’s Framework:
  Tax Reform
   Would not extend the Bush tax cuts
    for the wealthiest Americans
   Builds on the Fiscal Commission’s
    goal of reducing tax expenditures to
    both lower rates and lower the deficit
   Corporate tax
         eliminate loopholes
         reduce distortions
         lower the corporate tax rate
The White House, Fact Sheet: The President’s Framework for Shared Prosperity and Shared   81
Fiscal Responsibility (April 13, 2011), www.whitehouse.gov.
   Consumption Tax Options
    Progressive Personal Consumption
     Tax
    Subtraction method Value Added
     Tax
          Treasury Department proposal for
           Business Activity Tax (BAT)
    Credit-method (European) VAT
    National retail sales tax (RST)
Charles E. McClure, Jr., Why the United States Needs a Value Added Tax (2009),   82
http://www.taxadmin.org/Fta/meet/09am/papers/McClure.pdf.
Earlier Tax Reform Proposals
 President’s Advisory Panel on Tax
  Reform, Final Report (2005),
  http://govinfo.library.unt.edu/taxrefo
  rmpanel.
 U.S. Treasury Department, The
  President's Tax Proposals to the
  Congress for Fairness, Growth, and
  Simplicity (1985).

                                       84
Earlier Tax Reform Proposals
 U.S. Treasury Department, Tax
  Reform for Fairness, Simplicity, and
  Economic Growth: The Treasury
  Department Report to the President
  (3 volumes, 1984).
 David Bradford and the U.S. Treasury
  Tax Policy Staff, Blueprints for Tax
  Reform (Arlington, VA: Tax Analysts.
  2nd ed. 1984).
                                     85
Conclusion
 President needs 60 votes in the
  Senate and cooperation in the House
   The whole tax system is in play
     And will be in play for years
   Lobbyists will be tripping over each other
 Change is almost always incremental




                                            86
Sources
 The President’s Economic Recovery Advisory Board, The
  Report on Tax Reform Options: Simplification,
  Compliance, and Corporate Taxation (August 2010),
  http://www.whitehouse.gov.
 The National Commission on Fiscal Responsibility and
  Reform, The Moment of Truth (December 2010),
  http://www.fiscalcommission.gov.
 The Bipartisan Policy Center Debt Reduction Task Force,
  Restoring America’s Future: Reviving the Economy,
  Cutting Spending and Debt, and Creating a Simple, Pro-
  Growth Tax System (November 2010),
  http://bipartisanpolicy.org.


                                                        87
Sources
 Senators Ron Wyden & Dan Coats, Bipartisan Tax
  Fairness and Simplification Act of 2011 (2011),
  http://wyden.senate.gov/issues/legislation/details/?id=f
  b5b603a-ed94-48a8-8ff1-c220c1052b3f.
 Representative Paul Ryan, The Roadmap Plan (2010),
  http://www.roadmap.republicans.budget.house.gov.
 House Committee on Budget, The Path to Prosperity:
  Restoring America’s Promise (2011),
  http://budget.house.gov/UploadedFiles/PathToProsperity
  FY2012.pdf.
 Joint Committee on Taxation, Present Law and Historical
  Overview of the Federal Tax System (JCX-1-11), January
  18, 2011, www.jct.gov.

                                                        88
Sources
 National Taxpayer Advocate, 2010 Annual Report to
  Congress (December 31, 2010),
  http://www.taxpayeradvocate.irs.gov/Media-
  Resources/Annual-Report-To-Congress-Full-Report.
 Office of Management and Budget, 2012 Federal Budget,
  http://www.whitehouse.gov/omb/budget.
 The White House, Fact Sheet: The President’s
  Framework for Shared Prosperity and Shared Fiscal
  Responsibility (April 13, 2011), www.whitehouse.gov.
 Joint Committee on Taxation, List of Expiring Federal Tax
  Provisions, 2010-2020 (JCX-2-11), January 21, 2011,
  www.jct.gov.


                                                         89
  Sources
   The Tax Policy Center, Deficit Reduction Proposals,
    http://www.taxpolicycenter.org/taxtopics/Deficit-
    Reduction-Proposals.cfm.
   Joshua Rosenberg, The U.S. Fiscal Trajectory: Causes
    and Consequences (January 21, 2011),
    http://www.abanet.org/tax/MID11/papers/Rosenberg-
    slidesABA-Boca-Rosenberg.pdf.




U.S. Department of the Treasury, General Explanations of the Administration’s Fiscal Year 2012   90
Revenue Proposals (February 2011), http://www.treasury.gov/.
 About the Author
 Jonathan Barry Forman (“Jon”) is the Alfred P.
  Murrah Professor of Law at the University of Oklahoma
  College of Law and the author of Making America Work
  (Washington, DC: Urban Institute Press, 2006).
 Jon was the Professor in Residence at the Internal
  Revenue Service Office of Chief Counsel, Washington,
  DC, for the 2009-2010 academic year.
 Jon can be reached at jforman@ou.edu, 405-325-4779,
  www.law.ou.edu/faculty/forman.shtml.
 These slides are available at
  http://jay.law.ou.edu/faculty/jforman/Speeches/2011A
  BA-TAX-forman.ppt.



                                                   91

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:5
posted:11/30/2011
language:English
pages:91