2.1.3: Simplification
Simplify key provisions to promote work, homes, health, charity, and savings while increasing or maintaining progressivity. Other Information:
Congress and the President must decide which tax expenditures to include in the tax code in smaller and more targeted form
than under current law, recognizing that any add-backs will raise rates. The new tax code must include provisions (in some
cases permanent, in others temporary) for the following: • Support for low-income workers and families (e.g., the child credit
and EITC); • Mortgage interest only for principal residences; • Employer-provided health insurance; • Charitable giving; •
Retirement savings and pensions. Additional tax expenditures could be added to the provisions above, but must be paid for
with higher rates. Furthermore, the revised code must increase or maintain progressivity, across the income spectrum, relative
to the alternative fiscal scenario. In enacting tax reform, Congress and the President should design appropriate transition
rules that minimize economic distortions, achieve the necessary revenue targets, and allow taxpayers to adapt to the changes.
Though the precise details and exact transition rules should be worked out in a variety of ways by the relevant congressional
committees and the Treasury Department, the Commission has designed an illustrative set of reforms that would accomplish the
necessary parameters for tax reform. The plan below is an illustrative attempt to reflect the priorities of Commission members,
but Congress could choose different options. We developed this illustrative plan to demonstrate that it is possible both to
reduce rates dramatically and to achieve significant deficit reduction if tax expenditures are eliminated or scaled back and
better targeted.
Indicator(s):
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