Emanuel Calls for Middle Class Tax Fairness

WASHINGTON, D.C.—Today, U.S. Representative Rahm Emanuel (IL) delivered the following statement on the Middle Class Tax Fairness Act before the House Ways and Means Select Revenue Measures Subcommittee

“Thank you for the opportunity to testify before the Select Revenue Measures Subcommittee on my tax reform proposal, the Middle-Class Tax Fairness Act.

“This proposal will help middle-class families realize the American Dream by making the tax code simpler and fairer in four distinct areas: buying a home, raising children, sending them to college and saving for retirement. 

“In the last four years, 10,000 new pages have been added to the tax code, most of them adding new tax breaks for special interests.  Our tax system is needlessly complicated and burdensome to the middle class.  It is long past time for fundamental tax reform that restores equity to the tax code for middle-class families.

“When President Bush announced his Advisory Panel on Tax Reform earlier this year, he said his core principle of tax reform was that it should be revenue-neutral.

“I believe the core principle of tax reform should be that it does not increase taxes on the middle class and it makes the code simpler and fairer.

“The first provision of the Middle-Class Tax Fairness Act combines all the higher education tax credits into one simple and progressive Simplified College Tax Credit.  Nowhere is the need for tax reform more urgent than in the area of education incentives.  As USA Today wrote, “Want to save for education? Fantastic, but you had better be on good terms with your accountant.”

“This legislation will make it much easier – and much less expensive – for middle class parents to send their kids to college.  The Simplified College Tax Credit combines each of the overlapping and confusing higher education tax credits that exist today into one simple and progressive credit.

“Education tax incentives are designed to help families, yet the forms and the instructions that accompany them prevent families from taking full advantage of these incentives.  For instance the IRS instruction booklet for the various current education incentives is 85 pages long.  The Simplified College Tax Credit would cut that booklet in half.

“The second piece of my proposal is the Simplified Family Credit. The Simplified Family Credit will provide meaningful tax relief to middle-income families, stimulate the economy and simplify the tax code, while delivering these benefits in a fiscally responsible way. 

“It does so by condensing the earned income tax credit, child tax credit, and additional child credit into one expanded credit.  In the process, it shrinks 200 pages of tax code down to 12 easy questions.

“The third element of this proposal is a Universal Mortgage Deduction that is available to every homeowner, not just to those who can afford to itemize deductions. This provision will enable 10 million more Americans, most of whom earn $50,000 or less, to deduct the interest payments on their mortgages. 

“This simple step will help to level the playing field with the 31 million homeowners who currently take the mortgage interest deduction.

“The fourth and final provision would create a Universal Pension for all Americans.  During the past thirty years, Congress has created sixteen different tax-advantaged retirement savings accounts, each with its own contribution limits, income requirements and definitions. 

“At the same time, the savings rate has dropped from ten percent in 1980 to just one percent last year.  The vast array of accounts creates confusion and acts as a deterrent to those who want to save for retirement but cannot afford to hire an accountant to navigate the sea of options.  The Universal Pension would replace the ‘alphabet soup’ of retirement savings options with one simple account that is portable from job-to-job.  

“Mr. Chairman, the Middle Class Tax Fairness Act will add simplicity and fairness to the tax code while making it more equitable for America’s families. 

“Thank you again for the opportunity to testify before this subcommittee.”