A group from the Bipartisan Policy Center‘s (BPC) Debt Reduction Task Force, which is think tank comprised of members such as Alice Rivlin (former Federal Reserve Vice Chairwoman) and Pete Domenici (former NM Senator) released a special report today that can save America from a fiscal crisis. This group is different and parallels the group formed by the Obama Administration. The BPC released a report today called “Restoring America’s Future,” which called for sweeping tax changes in order to reduce America’s debt burden. The plan would keep public debt as percentage of GDP to 60%, and reduce annual deficits. Some of the reports suggested tax changes would start in 2012 and include:
- A new National Sales Tax at 6.5%
- Simplify the Personal Income tax to two brackets at 15% and 27%
- Eliminate Most Tax Credits and Deductions (including the mortgage deduction)
- Cut Corporate Tax Rates from 35% to 27% (which makes us more competitive globally)
- 1 Year Payroll Tax holiday for employees and employers
- Relieve 90 million taxpayers of having to file a tax return
- Slowly increase the cap in which payroll taxes are no longer paid (currently $106,800)
- Phase out tax exclusion for employer provided health care plans
- New sales tax on high calorie pop or sodas manufactured or imported
- Enact pay as you go rules for tax cuts or entitlement expansions
Other changes include strengthening Social Security by increasing the threshold for wages subject to the Social Security Tax, reducing the growth in benefits for the top 25%, as adjusting benefits to take better take into account inflation. Discretionary Spending and Defense spending would be frozen over 4 and five years respectively. Furthermore, Medicare and Medicaid would be reformed because these programs highly contribute to the nation’s debt problems. Moreover, pay as you go legislation for tax cuts and entitlement increases would be put in place to name a few other changes.
You can watch the press conference here and download the report. This plan will be attacked just like Obama’s Debt Reduction Commission report which must have at least 14 of 18 member votes in order to prompt congressional legislation or action on it. It is interesting to see if politicians can place the interest of the country ahead of their political aspirations during these tough economic times.