Tax Reform and Revenue Neutrality
October 7, 2005
Can we have fundamental tax reform without increasing taxes? Does tax reform have to be revenue neutral or be a tax cut to be effective? These are some questions tackled by the Tax Analysts roundtable discussion held today at the National Press Club attended by Tax Foundation economists.
These questions, however, appear to be moot when considering that due to the explosion of credits, exemptions and deductions the Tax Foundation estimates that 40 million tax filers will have no income tax liability whatsoever. When considering joint-filings and dependents on these returns, approximately 120 million Americans fall outside of the federal income tax.
Tax reform is sorely needed, but how can it occur without increasing taxes when fundamental reform will include reincorporating these non-payers into the system? This is an important consideration the President’s Tax Reform Panel must address.