Comprehensive Income Taxation: A Report of a Conference Sponsored by the Fund for Public Policy Research and the Brookings Institution

Comprehensive Income Taxation: A Report of a Conference Sponsored by the Fund for Public Policy Research and the Brookings Institution

Comprehensive Income Taxation: A Report of a Conference Sponsored by the Fund for Public Policy Research and the Brookings Institution

Comprehensive Income Taxation: A Report of a Conference Sponsored by the Fund for Public Policy Research and the Brookings Institution

Excerpt

MANY EXPERTS and laymen agree that the individual income tax -- the cornerstone of the federal revenue system -- has become unnecessarily complicated. Its basic structure remains progressive, but the proliferation of special deductions, exclusions, and tax credits has introduced wide disparities in tax liability among people with equal incomes and family responsibilities. Because the tax base has been narrowed so much, the marginal tax rates range from 14 percent to 70 percent, even though the revenue from the tax amounts to little more than 10 percent of total personal income.

The Internal Revenue Code has become so complex that almost every business must have technical tax advice before making major decisions. The tax forms have become so unwieldy that millions of low- and moderate-income Americans must pay others to have their tax returns prepared, and the firms that prepare tax returns have become large and profitable.

As a result of these developments, representatives of business, labor, and the general public are demanding tax reform to remove, inequalities in the tax treatment of people with the same income and to simplify the tax structure. During the 1972 presidential campaign, influential members of both political parties expressed their support for a complete overhaul of the individual income tax. Members of Congress have also become more insistent on fundamental reform.

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