Presentation to the President's
Advisory Panel on Federal Tax
Reform
May 11, 2005
Roland Boucher
United Californians for Tax
Reform
Overview
United Californians
for Tax Reform
A PROPOSAL TO REDUCE THE TOP TAX RATE TO 20% BY
ELIMINATING THE PERSONAL EXEMPTION AND
DEDUCTION FOR STATE TAXES
 Proposal
 Benefits of the Proposal




Simplification
Fairness
Administrative Ease
Promotes Economic Growth
 Other Effects of the Proposal
 Transition Costs
 Revenue Impact
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A Proposal to Reduce
the Top Tax Rate to 20%
United Californians
for Tax Reform
The Proposal
The seven key points of our proposal are as follows:
1) Eliminate all deductions for state and local income, sales, and
property taxes
2) Retain all other deductions, including home mortgage interest and
charitable contributions
3) Eliminate all personal and dependent exemptions.
4) Increase the standard deduction to $7950 for single tax filers and
$15,900 for joint tax filers
5) Retain the maximum tax rate of 15% for income from qualified
dividends and capital gains
6) Replace the 25% tax rate with a 20% tax rate and eliminate the 28%
33%, and 35% tax rates
7) Retain all other tax code provisions, including adjustments to gross
income (AGI) (such as IRA contributions and alimony payments)
and tax credits (including the child tax credit)
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A Proposal to Reduce
the Top Tax Rate to 20%
United Californians
for Tax Reform
Benefits of the Proposal
Simplification
1) Reduce the number of tax brackets from six to three
2) Reduce the number of taxpayers who claim itemized deductions from
40M to under 10M
3) Withholding easier to compute
4) Record keeping not necessary for most taxpayers
Fairness
1) Reduce the disparity of the Federal tax burden for taxpayers at the
same income level
2) Reduce the disparity of the Federal tax burden between taxpayers
from different states
3) Raise taxes for no taxpayer who now claims the standard deduction
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A Proposal to Reduce
the Top Tax Rate to 20%
United Californians
for Tax Reform
Benefits of the Proposal (continued)
Administrative Ease
1) Withholding easier to compute, for employers and financial
institutions
2) A simple tax table with single 20% rate above it will reduce taxpayer
filing errors
3) Reduce the number of taxpayers who claim itemized deductions from
40M to under 10M
Promote Economic Growth
1) Lower the top marginal tax rate by nearly 50 percent from 35% to
20%
2) Reduce disincentive to work
3) Reduce marginal tax rate for many small business owners
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A Proposal to Reduce
the Top Tax Rate to 20%
United Californians
for Tax Reform
Other Effects of the Proposal
Transition Costs
1) None expected
Our Proposal is Revenue Neutral
1) Eliminating the deduction for all state and local income, sales, and
property taxes will increase revenue by $73 billion
2) $73 billion is twice the revenue that was collected by the 28%, 33%,
and 35% tax rates making it possible to drop them entirely and
reduce the 25% tax rate to 21.4%
3) Eliminating the $3100 dependent exemption, and folding it into the
standard deduction, allows the top tax rate to be further reduced to
20%
Revenue analysis performed on computer model of US taxpayer
developed by UCTR
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