At our November 2011 Think Tank event, Mark Everson, former IRS Commissioner, former Congressmen Rick Lazio and Jim Ramstad, along with former Senate Tax Counsel, Dean Zerbe led a roundtable discussion to update the Alliant Group CPA attendees about the most current tax policy news from the Nation’s Capitol. With the upcoming 2012 Presidential election and the recent failure of the Congressional Deficit Reduction super committee to achieve results, the need for tax reform is on the minds of many.
Tax Reform
Most experts hold the position that the current Congress will not make significant progress toward tax reform or a resolution for the nation’s debt crisis. Both political parties are avoiding discussion of major changes to entitlement programs that make up the majority of the budget. Unemployment remains at an all-time high and the markets are volatile, making business tax reform nearly impossible before the 2012 election is over. Executive orders are expected to address budget issues prior to the election.
State and Local Budgets
Nearly every state and city in the country face serious budget constraints that have been caused by a decrease in revenue. The recent issue in Rhode Island caused by the turmoil in its pension benefit system illustrates a growing issue for states. Medicaid, which was once paid for by a 50/50 split with the federal government, will be funded more heavily from the states. The budget strains appear to be here to stay.
National Sales Tax
There are many people in this country who would like to see the current federal income tax system replaced with a national sales tax. Others believe that the impact of making the change would be overwhelming to accountants and the IRS, and cause bias among taxpayers.
The Final Evaluation
Tax reform likely rests on incremental changes that retain certain tax incentives targeted to the job engines in our economy: small businesses. As companies are encouraged to become more competitive and innovative, the economy will recover and generate more jobs.