Friday, June 21, 2013
This document is the last in a series of ten papers compiling tax reform options that Finance Committee members may wish to consider as they work towards reforming our nation’s tax system. This compilation is a joint product of the majority and minority staffs of the Finance Committee with input from Committee members’ staffs. ... The paper outlines the following potential goals for reform in this area:
- Simplify the law in order to reduce the cost to businesses and individuals of complying with the tax code.
- Ensure that the overall federal tax system is fair, while minimizing the negative effect of taxes on economic growth.
- Carefully consider whether and how non-income tax measures should account for any positive or negative externalities.
The paper lists the following broad reform options with more details included for each policy proposal:
I. EMPLOYMENT TAXES
- Increase FICA and SECA taxes.
- Eliminate or reduce the FICA and SECA taxes.
- Make the Social Security tax less regressive.
- Eliminate employment tax exclusions for certain categories of workers.
- Simplify, clarify, and make fairer the FICA and SECA tax rules.
- Reform the income tax treatment of Social Security and Medicare benefits.
II. WEALTH TRANSFER TAXES
- Repeal the estate and generation-skipping transfer taxes.
- Replace the wealth transfer system with an alternative wealth transfer tax system.
- Modify the tax rates and exemptions.
- Reform and simplify the current wealth transfer tax system.
- Miscellaneous simplification reforms.
III. EXCISE TAXES
- Introduce a securities transactions excise tax.
- Prohibit the Treasury Department from assisting foreign governments in enforcing taxes on securities transactions occurring on a U.S. exchange.
- Impose a levy on large financial institutions.
- Enact or increase sin taxes.
- Repeal all sin taxes.
- Enact a tax on the value of land.
- Modify the rum excise tax transfer (“cover-over”) to the United States Virgin Islands and Puerto Rico, and limit the total amount of direct or indirect government assistance to rum producers.
IV. CONSUMPTION TAXES
- Enact a consumption tax, while preserving the income tax and employment taxes.
- Replace the income tax with a consumption tax.
- Replace employment taxes with a consumption tax.