US Accounting Body Cautions Against Radical Shift In US Tax System

by Leroy Baker, Tax-News.com, New York

19 October 2005

A new report issued by the American Institute of Certified Public Accountants (AICPA) has warned that while tax reform and simplification is necessary, a flawed proposal could disrupt the economy and result in a loss of federal revenue.

“Tax reform is much tougher to accomplish than it is to envision,” noted AICPA president and CEO, Barry Melancon, on the release of the report, entitled: 'Understanding Tax Reform: A Guide to 21st Century Alternatives,' which foreshadows the release of the Presidential tax panel’s final report on November 1.

The AICPA report does not recommend that President Bush adopt specific proposals or tax systems, but highlights policy objectives that it recommends any tax reform proposal be measured against. These include: simplicity; fairness; economic growth and efficiency; neutrality; transparency; minimizing non-compliance; cost-effective collection; impact on government revenues; certainty; and payment convenience.

"A flawed proposal or a failed transition could disrupt the economy, impose high costs on individuals and business, and result in a loss of federal revenue," the report warned.

Observing that changes to the US tax system are "long overdue", Tom Ochsenschlager, AICPA’s vice president for tax, stated that policymakers need to "thoroughly review" the current system.

"We need, at the very least, to make it more understandable and easier to predict," he added.

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