Taxpayers Choice Act
by Jeb Hensarling
Issue 94 - October 24, 2007

The Republican Study Committee has just introduced theTaxpayer Choice Act, a comprehensive, individual income tax reform initiative with two principal goals: 1) eliminating massive future tax increases by repealing the Alternative Minimum Tax; and 2) providing individuals a choice for an alternative tax system that is transparent, simple and efficient.

Republicans have tried to fix the AMT problem before. In 1999, the GOP-controlled Congress passed a full repeal of the AMT and sent the bill to President Bill Clinton. Unfortunately, it was vetoed. In addition, despite campaign promises to reform or repeal the AMT, Speaker Nancy Pelosi and House Democrats have failed to act this year.

Unlike any other AMT reforms to date, the RSC plan will not increase taxes for ANY American. It also retains a fair and equitable distribution of federal tax burdens. In fact, if all taxpayers chose to pay taxes under theTaxpayer Choice Act, the distribution of tax burdens among income groups would remain extremely close to what it is today. For instance, taxpayers in the third income quintile (those earning between $29,000 and $50,000) would pay about 9 percent of overall taxes under the Simplified Tax, similar to the 8.6 percent under current law.

Above all, this plan offers a choice: taxpayers can choose the new system or stay with the current tax code. They have the freedom to select the option that best suits their particular circumstances.

As a matter of principle, we are an overtaxed nation and hardworking Americans deserve a break; as a matter of principle, Americans should have a tax code that is fair, simple and consistent; and, as a matter of principle, Americans should not have to abide by a tax code that is over 10,000 pages long. There is a fundamental difference when it comes to AMT policy: Does the money generated from the AMT belong to American families or the federal government? We believe it belongs to families, and that’s who should keep it.

It is time to move beyond trying to fix the AMT by making the tax code even more complex. Does anyone believe that further complicating an already dilapidated tax code is the answer? Let’s scrap an outdated tax policy that is causing greater harm by the minute and begin steps toward modernizing and simplifying a tax code that no longer represents the interests of American families.

Rep. Jeb Hensarling (R-TX), is Chairman of the House Republican Study Committee (RSC)