PERAB Releases Tax Reform Report

The President’s Economic Recovery Advisory Board (PERAB) released its report today on tax reform options designed to achieve three goals: simplify the tax system, improve taxpayer compliance and reform the corporate tax system.

According to the report, the options are not meant to be considered for a major overarching tax reform like the 1986 tax reform, but are meant to be helpful advice to the Obama Administration as it considers tax reform in the future. As requested by the Administration, PERAB only considered options that would be revenue neutral for each income class for those families making less than $250,000. This means that the options outlined would offset tax increases by adjustments to the standard deduction, tax rates or other provisions.

PERAB noted that it “did not try to hold all taxpayers harmless in the options … evaluated, and were not asked to do so by the president. It would be impossible to do so without substantial costs in terms of lost revenues.”

In the report, PERAB outlined options for simplifying the tax system by consolidating family benefits into a work credit and a family credit, consolidating retirement accounts and harmonizing statutory requirements, and harmonizing rules and tax rates for long-term capital gains, among others. To increase compliance, the board suggested dedicating more resources to enforcement, increasing information reporting, clarifying rules for businesses and numerous other strategies. For reforming corporate tax, PERAB’s report laid out options for reducing marginal corporate tax rates, broadening the corporate tax base and addressing international corporate tax issues.

For a full copy of the report, download the PDF file attached to this blog post.