TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Friday, June 24, 2016

Paul Ryan Unveils A Better Way To Do Tax Reform

Better Way

A Better Way for Tax Reform:

Our Principle
In a Confident America, the tax code and the IRS work for us, not against us.

Our Challenge
Our tax code is a mess, and that’s putting it lightly. Multiple brackets. High rates. Special interest breaks everywhere. Rules and regulations that are too complicated to understand. It costs more and more each year just to do your taxes, let alone pay them. All of this drags people down and leaves businesses buried in paperwork and compliance problems. So instead of promoting growth, our tax code is pushing jobs overseas. And the agency charged with overseeing all of this—the IRS—has repeatedly violated the trust of the American taxpayer.

Our Vision
We need a new tax code. It needs to be fair and simple for everyone. It should be so simple that most Americans can do their taxes on a form as simple as a postcard. Our tax code should be built for growth. It should help make the United States the best place in the world to hire and invest. And if we’re going to have a better tax code, we need a better IRS, one that puts the taxpayers first.

This blueprint offers a better way to dramatic reform—without increasing the deficit. It does so by promoting growth—of American jobs, wages, and ultimately the entire economy.

Our Ideas

  • Simplicity and fairness. Our plan makes the tax code simpler, fairer, and flatter, so that it’s not only easier to do your taxes, but it’s also easier to have peace of mind at critical moments in life
  • Jobs and growth. Our plan makes it easier to create jobs, raise wages, and expand opportunity for all Americans
  • A service first IRS. Our plan matches a simpler, fairer tax code with a simpler, fairer IRS that puts taxpayers first

SIMPLICITY AND FAIRNESS
Our plan makes the tax code simpler, fairer, and flatter, so that it’s not only easier to do your taxes, but it’s also easier to have peace of mind at critical moments, whether it’s going to school, getting a job, raising a family, or planning for retirement.

  • Save time and money by making it so that most Americans can do their taxes on a form as simple as a postcard
  • Consolidate the system down to three tax brackets, and lower the top individual income tax rate to 33 percent
  • Simplify tax filing for families by creating a larger standard deduction and a larger child and dependent tax credit
  • Make it easier to pay for college by streamlining the maze of education tax benefits
  • Eliminate the alternative minimum tax so you don’t have to do your taxes twice a year
  • Reward work by improving the EITC
  • Encourage charitable giving by providing a real tax incentive
  • Help families plan for retirement by reforming savings provisions
  • Stop overtaxing “Made in America” products so that our manufacturers can compete
  • Repeal the death tax so that the loss of a family member will no longer be taxable

JOBS AND GROWTH
Our plan will make it easier to create jobs, raise wages, and expand opportunity for all Americans.

  • Cut taxes on small businesses by creating a separate, low tax rate of 25 percent for many on Main Street
  • Cut taxes on savings and investment by allowing families and individuals to deduct 50 percent of the dividends, capital gains, and interest received from stocks and mutual funds
  • Provide a tax-free return on new investment by allowing, for the first time ever, full and immediate write-offs
  • Restore American competitiveness by lowering our corporate tax rate from the highest in the industrialized world to 20 percent and shifting to a “territorial” system with more competitive rates
  • Create more certainty by eliminating the death tax, which can take up to 40 percent of a family business’s assets if the owner passes away

A SERVICE FIRST IRS
A simpler, fairer tax code will require a simpler, fairer IRS with one mission: Put the taxpayers first.

  • Restructure the IRS around three major units: one for individuals and families, one for businesses of all sizes, and one that provides an independent “small claims court” approach to resolving routine disputes quickly
  • Install a new commissioner, subject to term limits, who will be required to administer the new tax code with fairness and keep the politics out of the IRS
  • Cut down on IRS intimidation by creating an Office of Dispute Resolution to serve as an independent arbiter to protect your rights and resolve disputes in a timely manner
  • Clear out the bureaucracy by doing away with all the rules, regulations, forms, and instructions that won’t be needed with a simpler, fairer tax code
  • Modernize information systems so that taxpayers have access to the resources they need when they need them—all while protecting privacy

A Better Way To Do Tax Reform:

Press and blogosphere coverage:

http://taxprof.typepad.com/taxprof_blog/2016/06/paul-ryan-and-house-gop-unveil-a-better-way-for-tax-reform-.html

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Comments

With all due respect, Ryan's personal history includes lying to Republican voters about what he promised to do, refusing to fight Obama and the Left on anything, and MORE than fully funding everything that Obama wanted for everything. This is just a lie to try to fool Republican voters into supporting those who have betrayed us yet again. After any putative election in November, if we had a Republican House, a Republican Senate, and a Republican President; Ryan would claim that he never heard of this plan.

Posted by: Subotai Bahadur | Jun 24, 2016 4:09:39 PM

This is wonderful for me. I'm self employed and have no wages or compensation. I have business income. So, under Paul Ryan's plan, I won't pay any tax.

Posted by: PhilaTaxLawyer | Jun 24, 2016 5:32:20 PM

Mr. Phila: I hear you. Somehow these postcard guys always seem to forget about sole proprietors.

Posted by: Publius Novus | Jun 24, 2016 7:16:43 PM

Ryan didn't forget investors. Only half their income gets taxed. And savers get interest tax-free plus an incentive to save. So not much in here for the regular guy.

Posted by: Old Ruster from JD Junkyard | Jun 24, 2016 9:28:50 PM

We are a Superpower and will always need to collect more in taxes than those low wage/taxation countries our corporations flee to. Who is he shifting the burden to?

Posted by: Richard L Kempe | Jun 25, 2016 7:28:47 AM

We are a Superpower and this makes a difference.

Posted by: Richard L Kempe | Jun 25, 2016 7:31:56 AM

I would keep lines 1-3, delete 4-5-6, keep line 7, and then delete 8-9-10-11.

Posted by: Dale Spradling | Jun 25, 2016 8:08:50 AM

Hey, PN - Don't ya think compensation includes Sch. C income? But, if it doesn't, I like this plan even better.

Posted by: Dale Spradling | Jun 25, 2016 8:10:30 AM

I agree, Dale. Income is either from labor or capital. Line 1 is intended to capture the former and Line 2 the latter.

Posted by: Mike Petrik | Jun 25, 2016 11:28:09 AM

Messrs. Spradling & Petrik: That would be a novel interpretation of "compensation," which is generally defined as a reward for service, damage, or injury.

Posted by: Publius Novus | Jun 25, 2016 2:34:43 PM

Like self-driving cars, not gonna happen.

Posted by: Captain Hruska Carswell, Continuance King | Jun 25, 2016 9:21:25 PM

Nice nitpicking in these comments. I guess you all think the current income tax structure is just fine, no room for improvement.

Posted by: Nathan | Jun 27, 2016 9:25:55 AM