December 05, 2006

Wyden Provides Real Tax Relief for Middle Classin Simpler, Flatter, Fairer Reform Plan

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

Washington, DC At a press conference today, U.S. Senator Ron Wyden (D-Ore.) introduced comprehensive 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. Wydens bill, the Fair Flat Tax Act of 2005, 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 don't 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.By making the system simpler, flatter and fairer we can provide real tax relief to the struggling middle class of America and begin reducing the deficit that is destabilizing our economy, our security and our future, Wyden said. This major middle class tax break will help financially struggling American families who have been hammered by the economy in recent years.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. Wydens 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.Its time to start treating work and wealth equally in the tax code, said Wyden. America can do better than a two-tiered tax system that makes a policeman pay a higher effective tax rate on his wages than the most fortunate American pays on his investment income. We can do better than a tax code that allows corporations to avoid paying taxes while the burden lands on the middle class.Corporate tax breaks targeted by the Wyden legislation 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 Wyden 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 is expected to be referred to the U.S. Senate Finance Committee, of which Wyden is a member. The Finance Committee would also likely hear any proposed legislation that comes out of the Presidents Advisory Panel on Tax Reform, which is expected to issue its formal recommendations by November 1.