The President’s TaxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. Reform Panel held its final public meeting yesterday and has hinted at what reform proposals it may endorse when it releases its final recommendations on November 1. These include measures aimed at shifting from a tax code filled with distortions and complexities to one that promotes simplicity and economic growth. From the Financial Times (via Yahoo News):
With his second-term domestic agenda stalled, President George W. Bush has been casting about for new initiatives. The panel he appointed to recommend simplifying the labyrinthine US tax code handed him a huge one on Tuesday, recommending sweeping changes to the US taxation system.
The panel intends to call for the capping of tax deductions on interest for home mortgages and employer-sponsored healthcare, eliminating the deduction for state and local taxes, and overhauling tax reductions for popular retirement savings schemes. In exchange, it will recommend abolishing taxation of dividends, cutting personal and corporate income taxA corporate income tax (CIT) is levied by federal and state governments on business profits. Many companies are not subject to the CIT because they are taxed as pass-through businesses, with income reportable under the individual income tax. rates, and ending the worldwide taxation of US corporate earnings.
The most controversial of its recommendations is likely to be reducing the mortgage interest tax deductionA tax deduction is a provision that reduces taxable income. A standard deduction is a single deduction at a fixed amount. Itemized deductions are popular among higher-income taxpayers who often have significant deductible expenses, such as state and local taxes paid, mortgage interest, and charitable contributions. , which allows taxpayers to write off their annual interest payments on home loans of up to $1m.
Even before the panel’s final report has been published,the powerful home-building industry has been lobbying to kill the proposal.
Now it appears to be a wait and see of what the panel will specifically propose. Stay tuned to this blog and the Tax Foundation’s Countdown to Tax Reform for the latest.
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