The Bipartisan Tax Fairness and Simplification Act of 2010
By Senators Wyden (D-OR) and Gregg (R-NH)
As Congress readies for the inevitable partisan debate over how best to address the expiring 2001 and 2003 tax cuts, U.S. Senators Ron Wyden (D-Ore.) and Judd Gregg (R-NH) today offered a bipartisan solution. The “Bipartisan Tax Fairness and Simplification Act of 2010” takes a comprehensive approach to reforming the tangled web of nearly 10,000 exemptions, deductions, credits and other preferences that currently clutter the U.S. tax code in order to create a simpler and fairer system that American workers and businesses can more easily navigate. By eliminating many of the tax expenditures that benefit narrow special interests, Wyden-Gregg offers fiscally-responsible tax-relief to the middle class and growth opportunities for American businesses to create jobs and compete globally.
“Senator Gregg and I are demonstrating that there is room for Democrats and Republicans to agree on tax reform,” said Wyden. “By simplifying the tax code and scaling back tax breaks for special interests, we can give everyone an opportunity to get ahead. Businesses of all sizes will be in a better position to compete and grow jobs. Working families will keep more of their hard earned dollars and everyone will spend a lot less time filling out tax forms.”
Senator Gregg stated, “I am pleased today to join Senator Wyden in introducing this bipartisan tax reform package. For far too long, our tax system has been overly complicated, burdensome and unfair to taxpayers and to small businesses that are the economic engines of our nation. This investment-oriented proposal will bring us back to common-sense tax laws that encourage people to create jobs and make our nation more competitive. A key element to this proposal is a flat 24% corporate tax rate to ensure our competiveness in the global market and create jobs in America.”
Gregg continued, “This legislation will also simplify the tax process to a one-page form and reduce the tax burden on working families. Tax reform shouldn’t be viewed as a partisan issue, but rather a place where we can work together to encourage job creation and strengthen our economy. This proposal echoes the successful tax reform championed by President Reagan and Bill Bradley during the mid-1980s. And it is time that we return to this sort of common-sense, bipartisan approach.”
Overall the “Bipartisan Tax Fairness and Simplification Act” follows the successful model of the bipartisan Tax Reform Act of 1986 which funded tax relief by eliminating a number of special interest tax breaks. Wyden-Gregg will provide tax relief for most families making up to $200,000 a year with a similar approach.
Wyden-Gregg will eliminate the Alternative Minimum Tax – which raises taxes for millions of middle-class Americans – and will reduce the number of individual tax brackets from the current six to three: 15 percent, 25 percent, and 35 percent. Middle-class and low-income taxpayers will benefit from Wyden-Gregg’s near tripling of the standard tax deduction, which will not only reduce tax bills but relieve Americans of the stress and responsibility of maintaining the records and receipts needed to document itemized deductions. These simplifications alone will make it possible for most taxpayers to file a simple one-page 1040 form and in an effort to make paying taxes even simpler, individuals and families can request that the IRS prepare a tax return for them to review and sign.
Wyden-Gregg takes steps to create a level playing field for businesses of all sizes. To encourage small business growth, more than 95 percent of small businesses – those with gross annual receipts of up to $1 million – will be able to permanently expense all equipment and inventory costs in a single year. To help American corporations compete internationally, Wyden-Gregg reduces the top corporate tax rate and replaces the existing six corporate rates and eight brackets with a single flat rate of 24 percent. Currently, U.S. corporations pay the second highest tax rate among industrialized countries. Wyden-Gregg reduces corporate tax rates approximately 30 percent-below the corporate tax rates of Canada, Germany, France, and many other U.S. trading partners – ensuring that U.S. domestic and multinational corporations can better compete in a global economy.
Additionally, Wyden-Gregg streamlines the tax code by eliminating a number of specialized tax breaks that favor one business sector or group of individuals over another. Removing these breaks for specific groups will not only make the tax code fairer and raise funds to extend tax relief on a more equitable basis, these simplifications will make it harder for businesses and individuals to avoid paying their taxes. This clean-up will also include the elimination of incentives to export jobs and keep foreign earnings overseas.