Tax reform, part 2: Lower rates; eliminate deductions

Source: Independent Institute
by Randall Holcombe

“As Congress considers tax reform, the focus on the personal income tax should be to lower rates and eliminate all deductions except for a standard deduction that applies to everyone. Lower rates enough to offset the increased revenue from eliminating deductions, and set the standard deduction at a level that raises the same amount of revenue as the pre-reform tax system. Personal income tax reform should be revenue-neutral. That avoids debates on whether taxes should be raised or lowered and focuses on making the tax system fairer and more efficient. I propose a flat rate of 22% on all income beyond the standard deduction. Set the standard deduction at a level that satisfies the revenue-neutrality criterion.” (08/15/17)