Base broadening could include all forms of income, such as wages and “anything that allows you to spend more, either now or in the future” (President’s Advisory Panel 2005, 20). These sources include retirement account income, capital gains, dividends, rental income, employer-provided health insurance, and unrealized increases in the values of financial assets and real estate. Base broadening could also limit deductions not directly related to the cost of earning income, including current law deductions for home mortgage interest, state and local income and property taxes, and charitable contributions and the current law deduction of 20 percent of qualified business income..

The President’s Advisory Panel looked closely at a somewhat less comprehensive broad-based income tax that would eliminate certain credits and “above the line” deductions, and reduce and restructure itemized deductions. It proposed to eliminate the individual alternative minimum tax and  keep the standard deduction and personal exemptions.

The Bowles-Simpson Commission’s “zero-base budgeting” plan proposed to modify the income tax to lower rates and deficits by cutting tax expenditures. It would have eliminated many deductions, exemptions, credits, and preferential rates (raising an estimated $1.1 trillion per year).

The Domenici-Rivlin plan, for its part proposed to tax capital gains and dividends as ordinary income, simplifies the earned income tax credit, convert itemized deductions to credits, and cap the exemption of employer-provided health insurance benefits.. It also would have replaced the current law standard deduction, personal exemption and earned income credit with simplified earning and child credits.

The 2017 Tax Cuts and Jobs Act contained only limited base-broadening and some base narrowing. It would have capped the state and local tax deduction and lowered the cap on the home mortgage interest deduction. It also would have reduced the share of taxpayers claiming itemized deductions by increasing the standard deduction and eliminated some smaller itemized deductions, including those for unreimbursed employee expenses tax preparation fees, and most casualty losses.  Other major changes included replacing personal exemptions with expanded child tax credits and, adding a significant new deduction for pass-through business income. It also would have substantially reduced the corporate income tax rate, scaled back a few business tax preferences, and restructured the taxation of foreign-source income of US companies.

Updated January 2024