President Bush's panel on Tax Reform released their recommendations on November 1. This has caused a number of different groups to respond (some of which I've listed below) in a variety of ways.
Remember, nothing has been implemented yet. These are only suggestions following President Bush' s guidelines of finding an easier way to collect taxes (simplify), and without raising taxes while continuing to collect the same amount. He specified that charitable giving and investments should also be encouraged.
Essentially, what they have suggested seems to be positive (in my own opinion). 75% of tax payers will fall into the lowest bracket which appears to be a %15 income tax. I myself would benefit tremendously as I now pay about 23%.
They have recommended getting rid of the AMT or Alternative Minimum Tax. What this does is force some people to pay a higher tax even if they have deductions on their standard income tax return. This has become a burden for more and more people as they earn more income.
Unfortunately, many deductions would be eliminated. I rent so I wouldn't be affected by this, but mortgage interest would not be a deduction anymore. Instead, you would have deductions based on charitable giving and family size. You would also lose deductions for state taxes.
If you invest your money in housing or the stock market, they would also be lowering capital gains tax and dividend taxes to 15%. This would have a significant effect on encouraging people to invest their money rather than spend it. Related to this, 401(k), IRA's and other pre-tax savings tools would be consolodated into three different accounts, each with a higher cap, effectively providing more incentive for people to plan for the future and save money.
The panel also have decided to forego the suggestion of a national sales tax. I posted a few months ago about this issue and feel that it might still be a better solution, but overall the ideas of the Panel should cut in half the amount we, the citizens, spend on tax software or tax preparers. All this saved money could be invested or used to better our standard of living.
Corporations are also rewarded in the proposal with a decrease in tax rate from 35% to 31.5%. This could have the effect of allowing companies to reinvest the money otherwise spent on taxes.
A great article here produced by the Tax Foundation goes into far more detail on pros and cons and their likely effects.
The Heritage Foundation has also released a critique of the suggestions where they grade each of the individual proposals based on an ideal, business and consumer friendly model. Give it a read.
Robert Novak, a conservative pundit, thinks the plan is dead in the water and is not afraid to tell people here. He believes the people on the commission did not consider all of the options because of their prior political leanings.
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