More details of the recommendations of the President’s Advisory Panel on Federal Tax Reform have come to light. These are more extensive than those proposals that I mentioned .
I don’t want to spend a whole lot of time on this. It’s just a proposal — it’s a long way from being enacted into law, and it may sink into oblivion like Dubya’s mad Social Security party. Even if it does get through the Congressional tract, it will probably be hard to recognize when it comes out the other end. But still, it makes sense to keep an eye out for what might be coming and to try and anticipate how conscientious tax resisters may choose to react.
Some elements of the new recommendations are:
- Something akin to the “X Tax” preserving a progressive income tax, but eliminating taxes on dividends and reducing capital gains taxes as a way of simulating a consumption tax within an income tax framework
- A smaller number of tax brackets, with 75% of people in the lowest, 15% bracket
- Accelerated depreciation on business equipment
- New tax-free savings accounts for retirement, health, education, and home buying will replace the existing tax-free and tax-deferred accounts such as Health Savings Accounts, Individual Retirement Accounts and so forth — this could allow a taxpayer to shield up to $20,000 from taxes each year. “Low income taxpayers could get a savers credit worth up to $500,” which is the cornerstone to my current tax avoision technique.
- Abolishing the Alternative Minimum Tax
- Flattened and simplified business taxes
- Something called the “new work credit” that replaces the Earned Income Tax Credit
- Eliminating some deductions, such as the itemized deduction for state and local taxes paid
- “Myriad personal and family tax breaks would be replaced with one family credit. Income tests designed to keep most current tax breaks within the middle class would be eliminated, letting wealthier individuals and families benefit.”
- Restrictions and reductions of the mortgage interest deduction
- Caps on the deduction for health insurance that employers provide to workers, and elimination of the deduction for other employer-provided benefits like child care and life insurance
- Abolish taxes on social security benefits
Depending on how these are implemented, or indeed if they are, this could be a boon or a challenge to conscientious tax resisters.