Dr. Judyth Swingen, accounting professor at UALR, chaired the American Institute of Certified Public Accountants’ (AICPA) Tax Reform Task Force, which submitted federal tax reform recommendations in a report to President Obama’s tax reform panel this week.
AICPA is the national professional association of certified public accountants and has a long history of assisting lawmakers with tax policy matters and advocating sound tax policy. The AICPA Tax Division acknowledged the work done on the report, “Tax Reform Alternatives for the 21st Century,” by its five-member Tax Reform Task Force led by Dr. Swingen and the AICPA Tax Legislation and Policy Committee, of which Swingen is a member.
“I was fortunate to have the opportunity to work with some very experienced tax professionals on this project,” said Swingen. “My task force included the former national taxpayer advocate and the former head of the AICPA’s Tax Division.”
In March, Obama called for the formation of a task force to review the current income tax system and suggest ways to simplify it and improve compliance and to reform the corporate tax. With the continued focus on the need and desire to improve the current tax system by the administration and congressional leaders, the AICPA produced the report to serve as a resource to those engaged in the current tax reform debate. The committee’s objectives were to provide policymakers with a clear understanding of the issues and alternatives involved in federal tax reform and to foster informed discussion by providing unbiased information and analysis.
“Tax Reform Alternatives for the 21st Century” outlines efforts to improve the current system without changing its fundamental character. These include wide-ranging simplification efforts, increasing fairness, reducing revenue lost from tax evasion (known as the tax gap), and broadening the tax base. These proposals address economic growth by improving economic efficiency through greater neutrality, creating incentives for capital formation, accelerating depreciation, eliminating double taxation of corporate profits, simplifying and increasing tax-preferred savings options, and reforming counterproductive characteristics of the tax system as applied to domestic corporations and international businesses.
The report describes the nature of the issues leading to a tax reform debate, suggests a balanced approach for analyzing tax reform proposals, and summarizes key issues to be addressed whether taxing income or consumption or both.
“We are very pleased with Judyth’s efforts in leading this task force in this difficult but crucial work,” said Dr. Robert R. Oliva, chair of the Department of Accounting in UALR’s College of Business.
Tax reform will by necessity be influenced by issues currently facing the country including:
- The baby boom generation is starting to retire, placing additional burdens on strained entitlement programs including those where the costs of providing for health care continue to increase.
- The 2001 and 2003 tax cuts will expire in 2010, generating additional government revenues without corresponding examination of appropriate and fair tax burdens.
- The reach of the alternative minimum tax will grow exponentially, subjecting millions of taxpayers to unintended, higher levels of taxation, requiring more and more costly adjustments to limit its effect to the intended taxpayer group.
- Revenue needs will increase substantially to address historic levels of debt and annual deficits as a result of defense spending, the recent economic challenges, and financing new policy initiatives such as health care reform.
Congress faces some tough choices in the coming months. The annual budget deficit is now at a record level. Health care reform will be expensive. Medicare and Social Security payments this year will exceed the taxes collected for these programs. The AICPA Tax Reform study did not advocate a particular solution for the government’s fiscal problem. Instead, it identified several possible alternatives and discussed the pros and cons of each.