Research report Radical Simplification of the Income Tax: Issues and Options
William G. Gale
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I propose and analyze four major revenue-neutral sets of federal income tax reforms, each of which would create a simpler and more progressive system. A new page on the Urban-Brookings Tax Policy Center Website allows anyone to compare their filing requirements and tax burdens under the alternatives and the current system. Several major thematic conclusions emerge. The fundamental cause of tax complexity is conflict among consensus policy goals, including efficiency and equity. There is massive potential for simplification, but there is no such thing as “just” simplifying the tax code. Even if simplification is the only goal of a reform, it will not be the only effect. Simplification efforts should bear in mind people’s overall interaction with the government, not just with the tax system. The fundamental question is not the overall level of complexity, but whether tax rules (or spending programs or regulations) provide good value for the complexity they create. Although it is easy to write down simple tax systems on paper, it is much harder to enact or maintain such systems in the real world

Primary topic Individual Taxes
Research Area Fundamental reform proposals Individual Taxes