AICPA Provides Tax Reform Principles to White House Panel

Fri Oct 16, 2009 6:15pm EDT

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Melancon Offers Recommendations to President's Economic Recovery Advisory
Board




WASHINGTON, Oct. 16 /PRNewswire-USNewswire/ -- Barry Melancon, president and
CEO of the American Institute of Certified Public Accountants, testifying
before the President's Economic Recovery Advisory Board at the White House
today, called for comprehensive tax reform and revisions to the alternative
minimum tax and estate and gift tax rules.


"The dynamic American economy is rebounding slowly and, we believe, is
burdened by an unnecessarily cumbersome and somewhat outdated income tax
system.  In particular, we see significant problems for small businesses
arising from the increasing complexity of the tax law," Melancon said.


The advisory board is headed by White House outside economic advisor Laura
D'Andrea Tyson and former Federal Reserve Chairman Paul Volcker.  The panel is
directed by White House Senior Economic Advisor Austan Goolsbee. The purpose
of today's hearing was to take testimony on proposals to simplify the tax
system. Congress is likely to take up tax reform as a major legislative
challenge beginning in January.


"The AICPA has long been an advocate for simplification and fairness in the
tax law.  Although it may be impossible to remove all complexity from our tax
laws, a significant amount of simplification is achievable and would be
beneficial for individual taxpayers, businesses, the federal government, and
the economy," Melancon said.


The AICPA recommended that the Obama administration and Congress take steps to
simplify and ease the alternative minimum tax, which is projected to hit 30
million middle-class Americans in 2010. The AICPA urged Congress to reform
immediately the estate and gift tax rules before 2010, when the estate tax is
scheduled to be repealed. The AICPA released an update of its Tax Reform
Alternatives for the 21st Century, a report providing policymakers and the
public with a clear, nonpartisan analysis of the issues and alternatives for
federal tax reform.


The AICPA's Tax Reform Alternatives for the 21st Century makes clear that any
serious consideration of tax reform must take into account significant events
that have begun to impact federal tax revenues:


    1. Dealing with the economic strain of a retiring baby boom generation.
    2. Understanding the human impact of the expiring 2001 and 2003 tax cuts.
    3. Controlling the exponential growth of the alternative minimum tax where
       20,000 taxpayers were impacted in 1970, four million in 2007, and,
unless
       Congress acts, an estimated 30 million in 2010.

    4. The recession has caused a sharp reduction in federal tax revenue.



The AICPA Recommendations:
The AICPA offers two major recommendations to the PERAB for changes that would
help simplify the tax system and has developed a list of other, smaller,
changes that would help. Those are:


    --  Simplification of the individual alternative minimum tax (AMT)

        --  The AICPA recognizes that eliminating the individual AMT, although
            preferable, may not be feasible because of a large revenue loss. 
            The AICPA proposes thirteen alternative solutions to reduce or
            eliminate most of the complexity and unfair impact of the AMT as
            currently imposed.



    --  Reform of the estate and gift system

        --  The AICPA submitted to Congress a list of suggested reforms of the
            current estate and gift tax system that would promote
            simplification.  The suggestions include increasing the exemption
            and indexing it for inflation; retaining the full step-up in basis
            for inherited assets and avoiding the complexities of carryover
            basis; providing broad-based liquidity relief, rather than
targeted
            relief provisions, and providing portability to a surviving spouse
            to simplify estate planning and estate administration for married
            couples.



    --  Compendium of simplification improvements

        --  The AICPA initiated a project to publish an annual compendium of
            legislative proposals focused on simplification and technical
            revisions that are not unduly controversial. The goal is to
promote
            simplicity and fairness and to correct certain inequities.



The full text of Tax Reform Alternatives for the 21(st) Century is available
at
http://www.aicpa.org/download/news/2009/PERAB_AICPA_Tax_Reform_October_2009_FINAL.pdf


About the AICPA 
The American Institute of Certified Public Accountants (www.aicpa.org) is the
national, professional association of CPAs, with more than 360,000 CPA members
in business and industry, public practice, government, education, student
affiliates, and international associates. It sets ethical standards for the
profession and U.S. auditing standards for audits of private companies,
non-profit organizations, federal, state and local governments. It develops
and grades the Uniform CPA Examination.


The AICPA maintains offices in New York, Washington, D.C., Durham, N.C.,
Ewing, N.J., and Lewisville, Tex.


Media representatives are invited to visit the AICPA Online Media Center at
www.aicpa.org/mediacenter.


















SOURCE  American Institute of Certified Public Accountants

William Roberts, +1-202-434-9266, wroberts@aicpa.org, or Shirley Twillman,
+1-202-434-9220, stwillman@aicpa.org
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