2004 budget proposals: tax simplification: March 25, 2003.

On March 25, 2003, the following letter was sent to Secretary of the Treasury John W. Snow from Tax Executives Institute, the American Institute of Certified Public Accountants, and the Section of Taxation of the American Bar Association. The three groups have worked together on tax law simplification for the past several years.

The American Institute of Certified Public Accountants, the American Bar Association Section of Taxation, * and the Tax Executives Institute have been working together over the past few years to sensitize the public, the Administration, and the Congress to the urgent need for major simplification of the tax laws. We therefore are pleased that the Administration has included several specific simplification provisions in the 2004 revenue proposals. This letter reflects our jointly-held views only on the simplification aspects of the Administration's proposals.

We especially welcome the proposals to adopt a uniform definition of qualifying child for purposes of various child-based benefits and to eliminate the income-related phase-outs for the adoption tax credit and exclusion. Adopting a uniform child definition and eliminating income-related phase-outs were two of the three priorities our group identified to the Administration last fall as warranting immediate attention.

We are pleased as well that the Administration included simplifying elements in other proposals designed to further certain narrower policy objectives, for example: increasing the expensing limits for small business; excluding the value of employer-provided computers and equipment from income; and repealing the restrictions on the use of qualified section 501(c)(3) bonds for residential rental property. Moreover, we appreciate the Administration's willingness to seek simplification of the retirement savings regime.

Notwithstanding these very positive initiatives, we believe the revenue proposals should have included more in the way of simplification measures--in particular, more extensive relief from phase-outs, as well as immediate repeal of the individual and corporate alternative minimum taxes (AMT). While the Administration's proposals do contain a stop-gap measure providing temporary AMT relief for individuals, the widely recognized and long acknowledged gravity of the AMT problem warrants an immediate, permanent solution. Stop-gap measures simply postpone the inevitable and increase the revenue cost of the ultimate resolution.

Certain other...