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Wyden Provides Real Tax Relief for Middle Class
in “Simpler, Flatter, Fairer” Reform Plan
Senator’s legislation treats income
from work and wealth equally,
ends breaks that have shifted burden onto middle-class Americans
October 27, 2005
Washington, DC – At a press
conference today, U.S. Senator Ron Wyden (D-Ore.) introduced comprehensive
tax reform legislation that contains major tax relief for America’s
middle class as it makes the U.S. income tax code simpler, flatter
and fairer. Wyden’s bill, the “Fair Flat Tax Act of
2005,” allows every taxpayer to file taxes on a simplified,
one-page 1040 form, collapses individual tax brackets from the
current six down to three and sets one, flat corporate rate. It
also ends the Alternative Minimum Tax for personal income taxes,
and allows federal taxpayers who don't itemize to receive a tax
break for state and local taxes. Ending a number of corporate
tax preferences also allows the legislation to reduce the deficit
by approximately $100 billion over the next five years.
“By making the system simpler,
flatter and fairer we can provide real tax relief to the struggling
middle class of America and begin reducing the deficit that is
destabilizing our economy, our security and our future,”
Wyden said. “This major middle class tax break will help
financially struggling American families who have been hammered
by the economy in recent years.”
According to the Congressional Research
Service, the Fair Flat Tax Act of 2005 can provide tax cuts for
middle-class families and for families with wage and salary income
up to $150,000. Wyden’s plan provides higher standard deductions
for every individual, ends tax provisions that prefer unearned
income such as capital gains and dividends over wage and salary
income, and provides an unprecedented, refundable 10 percent tax
credit for every taxpayer’s state and local taxes –
a direct benefit for the more than two-thirds of taxpayers who
currently do not itemize their taxes.
“It’s time to start
treating work and wealth equally in the tax code,” said
Wyden. “America can do better than a two-tiered tax system
that makes a policeman pay a higher effective tax rate on his
wages than the most fortunate American pays on his investment
income. We can do better than a tax code that allows corporations
to avoid paying taxes while the burden lands on the middle class.”
Corporate tax breaks targeted by
the Wyden legislation include those that offer preferences to
one business sector over another, as well as those that allow
companies to defer or avoid altogether paying some taxes. A number
of individual tax preferences are repealed under the Wyden legislation
as well, but those used most by Americans – including home
mortgage deductions, child credits, and breaks for charitable
contributions, health and education savings – remain, as
do protections for the most common investments for retirement.
America’s seniors, military and veterans and the disabled
will continue to receive targeted tax breaks contained in the
current code.
The Fair Flat Tax Act of 2005 is
expected to be referred to the U.S. Senate Finance Committee,
of which Wyden is a member. The Finance Committee would also likely
hear any proposed legislation that comes out of the President’s
Advisory Panel on Tax Reform, which is expected to issue its formal
recommendations by November 1.
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