Tax reform panel gives recommendations to Snow

WASHINGTON (11/2/05)—The President's Advisory Panel on Federal Tax Reform Tuesday turned its 272-page recommendation for changing the U.S. tax code over to U.S. Treasury Secretary John Snow who said it is now his department's job to come up with a proposal to make the country's tax rules "simple, fair, and pro-growth."

The Credit Union National Association (CUNA) has been monitoring the progress of the Advisory Panel since it was established January 7 to see if the final report would comment on the tax-exempt status of non-profit organizations.

CUNA President/CEO Daniel Mica noted Tuesday, "Although there has been tremendous input to the Panel from banker groups urging taxation of credit unions, it is a positive development that the final report contains no recommendation to eliminate the tax-exempt status of credit unions or any tax-exempt organization."

The report, without singling out credit unions or any other not-for-profit, said only, "Effective action should be taken to ensure better oversight and governance of exempt organizations." It continued, "A tax exemption, which is paid for by all Americans, should be extended only to organizations that are truly serving the public interest."

The panel, lead by Chairman Connie Mack III and Vice Chairman John Breaux, offered two plans aimed at simplifying the tax code and erasing perceptions of unfairness. The plans, called the Simplified Income Tax Plan and the Growth and Investment Tax Plan, are intended to do the following, according to the panel report:

  • Simplify the entire tax system and streamlined tax filing for both families and businesses;

  • Lower tax rates on families and businesses, while retaining the progressive natures of the current tax system;

  • Extend the tax benefits for home ownership and charitable to taxpayers beyond the 35% who itemize; extension of tax incentives for health insurance to taxpayers without employer-sponsored plans;

  • Remove impediments to savings and investments;

  • Eliminate the alternative minimum tax—which is projected to raise taxes for tens of millions of taxpayers by 2015.
The plans differ in the approaches they propose for the taxation of business and capital income.

At a press conference Tuesday, Secretary Snow said he believed Treasury would be able to have a tax revision plan ready by the end of the year. Changes to the tax code would have to be approved by Congress and signed into law by the President.

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