Advocating for sound tax policy is just one of the AICPA’s roles in the tax arena. The AICPA has also issued reports and testified before Congress on the problems arising from tax law complexity and offered solutions. The issue of simplifying our tax system has been of such importance that the AICPA joined with the American Bar Association Section of Taxation and the Tax Executives Institute to urge Congress and the Department of the Treasury make this subject a top priority.
In October 2005, the AICPA issued Understanding Tax Reform: A Guide to 21st Century Alternatives, two weeks ahead of the report by the President’s Advisory Panel on Federal Tax Reform. The AICPA’s nonpartisan report is designed to be a resource for policymakers, our members and interested individuals as they strive to understand of the issues and alternatives involved in federal tax reform and take part in informed discussions. It outlines the primary principles the AICPA believes are necessary to guide a successful tax reform process and some of the problems taxpayers are likely to encounter during a transition from the current tax system to a new one.
The 2005 report builds on the success of Flat Taxes and Consumption Taxes: A Guide to the Debate, released by the AICPA in 1995. Highly regarded by tax experts, the 1995 report offered a comprehensive and evenhanded analysis of tax alternatives. Although the tax reform debate may be different in 2005, many issues have not changed. Revisiting our 1995 study can offer some historical perspective on the current tax reform debate.
Policymakers should evaluate competing tax reform proposals according to ten guiding principles: simplicity; fairness; economic growth and efficiency; neutrality; transparency; minimizing non-compliance; cost-effective collection; impact on government revenues; certainty; and payment convenience.