December 05, 2006

Wyden, Emanuel Join Forces for Middle Class Tax Reliefand Simpler, Flatter, Fairer Tax Plan

Bicameral legislation treats income from work and wealth equally,ends tax breaks that have shifted burden onto middle-class Americans

Washington, DC At a press conference today, U.S. Senator Ron Wyden (D-Ore.) and U.S. Representative Rahm Emanuel (D-Ill.) touted their comprehensive, bicameral tax reform legislation that contains major tax relief for Americas middle class as it makes the U.S. income tax code simpler, flatter and fairer. Wyden introduced the Fair, Flat Tax Act of 2005 in the Senate in October; Emanuel announced plans today to introduce companion legislation in the House of Representatives. Specifically, the legislation allows every taxpayer to file taxes on a simplified, one-page 1040 form, collapses individual tax brackets from the current six down to three, and sets one flat corporate rate. It also ends the Alternative Minimum Tax for personal income taxes, and allows federal taxpayers who do not itemize to receive a tax break for state and local taxes. Ending a number of corporate tax preferences also allows the legislation to reduce the deficit by approximately $100 billion over the next five years.Todays tax system is unnecessarily complex, inefficient and unfair to middle class taxpayers. Our current tax policies have created a culture of cheating and rampant tax avoidance. As a result, middle class taxpayers are left to pick up the slack for those who dont pay their fair share, said Emanuel. Now is the time to pass real tax reform so the tax code works for everyone instead of a few.For 20 years, the U.S. code has been cluttered with tax breaks and loopholes, widened the gap between wealth and work, and left the middle class to shoulder the majority of the tax burden in our country, said Wyden. Today were saying that we can provide real relief to the middle class by making the system simpler, flatter and fairer and we have a plan to do it. Right now, the cop walking the beat pays a higher effective tax rate than someone who makes their income from capital gains and dividends; thats why its time to start treating work and wealth equally in the tax code.According to the Congressional Research Service, the Fair Flat Tax Act of 2005 can provide tax cuts for middle-class families and for families with wage and salary income up to $150,000. Specifically, the Wyden-Emanuel plan:" provides higher standard deductions for every individual," ends tax provisions that prefer unearned income such as capital gains and dividends over wage and salary income, and" provides an unprecedented, refundable 10 percent tax credit for every taxpayers state and local taxes a direct benefit for the more than two-thirds of taxpayers who currently do not itemize their taxes.Corporate tax breaks targeted by the Fair Flat Tax Act include those that offer preferences to one business sector over another, as well as those that allow companies to defer or avoid altogether paying some taxes. A number of individual tax preferences are repealed under the legislation as well, but those used most by Americans including home mortgage deductions, child credits, and breaks for charitable contributions, health and education savings remain, as do protections for the most common investments for retirement. Americas seniors, military and veterans and the disabled will continue to receive targeted tax breaks contained in the current code.The Fair Flat Tax Act of 2005 has been referred to the U.S. Senate Finance Committee, of which Wyden is a member. Emanuels version of the legislation is expected to be referred to the House Ways and Means committee, of which he is a member.