It’s no secret that the United States income tax system is complicated and unnecessarily cumbersome in many cases. The CPA profession considers these complexities hurdles to economic recovery.
The VSCPA believes changes need to be made, most immediately in the areas of alternative minimum tax (which is projected to impact 30 million middle-class Americans in 2010) and estate and gift tax rules.
On October 16, 2009, American Institute of CPAs (AICPA) President & CEO Barry Melancon testified before the President’s Economic Recovery Advisory Board (PERAB) at the White House, laying out principles for effective tax reform.
The VSCPA applauds the AICPA’s efforts to improve our federal tax system and promote simplicity and fairness.
In a nutshell, Melancon recommended the administration and Congress simplify and ease the alternative minimum tax (AMT), offering 13 alternative solutions to mitigate complexity and inequity. While the AICPA says outright eliminating the individual AMT is preferable, the Institute recognizes that course of action may not be feasible due to the reality of potential revenue losses.
The AICPA also urged Congress to reform immediately the estate and gift tax rules before 2010, when the estate tax is scheduled to be repealed. Suggestions included increasing the exemption and indexing it for inflation; retaining the full step-up in basis for inherited assets and avoiding the complexities of carryover basis; providing broad-based liquidity relief, rather than targeted relief provisions, and providing portability to a surviving spouse to simplify estate planning and estate administration for married couples.
In its report to policymakers and the public, “Tax Reform Alternatives for the 21st Century,” (PDF) the AICPA provides expert analysis of the issues and fleshes out the abovementioned alternatives for federal tax reform. The AICPA also outlines its recommendations in a recent press release. Stay tuned for updates.
Stephanie R. Peters, CAE, is president & CEO of the Virginia Society of CPAs (VSCPA), the statewide professional association for CPAs. She leads the VSCPA on national and state professional issues, legislative and regulatory oversight, strategic planning, Board of Directors relations, Board resolutions and policies and external relations. She is also a member of the VSCPA Board of Directors and Executive Committee.