US Tax Groups Urge Treasury Secretary O'Neill To Simplify Tax Laws

Mike Godfrey, Tax-news.com, Washington

13 March 2001

In a joint letter sent last month to US Treasury Secretary Paul O'Neill, three US tax bodies urged President Bush's new administration to simplify US tax laws, stating that the country's income tax system had reached "a critical juncture."

Outlining specific recommendations for tax simplification, The American Institute of CPAs, the Tax Executives Institute, and the Taxation Section of the American Bar Association said: 'American taxpayers have lost not only the ability to understand and comply with the law without expending considerable resources, but also respect for a tax system that increasingly makes them victims of its unintended consequences and outdated or ill-conceived policies.'

The letter continued: 'The Bush Administration and Congress have an historic opportunity to reverse course - to move beyond paying lip service to tax simplification to making it a real part of each tax proposal that is enacted. Given the projected budget surplus, the growing consensus that major tax legislation will be enacted this year, and the Joint Committee on Taxation's forthcoming staff report on tax simplification, we believe the time is right for simplification.'

The tax groups have made several recommendations, including the repeal of the corporate Alternative Minimum Tax (AMT). Created in 1986, the AMT was intended to ensure that large companies do not take so many deductions and credits that they avoid paying taxes. The effect, business groups say, is that when company earnings fall, the minimum tax essentially throws out the deductions they were taking before.

Other recommendations put forward are the elimination or the simplification of phase-outs; and the simplification of the taxation of capital gains through the establishment of a single preferential rate and a single long-term holding period for all types of capital assets.

Recommended