Posted: May 23, 2005 By: Donald E. Jerrems

Subject: Keep it Simple

Comment: The President's Advisory Panel on Federal Tax Reform
1440 New York Avenue NW
Suite 2100
Washington, DC 20220
Via email:
By: Donald E. Jerrems,
16241 Leeward Lane
Huntersville, NC 28078

I am an independent private citizen who believes that the personal income tax, corporate and estate tax codes need serious reform because too many economic decisions are based on tax effect rather than economic benefit.

REFORM OBJECTIVES: To have the widest possible tax base with no loopholes such that all taxpayers are encouraged to earn the most income and be treated fairly and equally. Income tax calculations should be simple and as painless as sales tax payments. Recordkeeping should be minimal.


1. Eliminate tax effects out of personal economic decisions as much as possible such that taxpayers make their spending choices regardless of the tax implications.

2. Define taxable income carefully and as broadly as possible. Taxpayers should be encouraged to report their income accurately. The IRS monitors for compliance.

3. Permit NO EXCLUSIONS, DEDUCTIONS OR TAX CREDITS from taxable income. This eliminates over half of the tax code that pertains to how taxpayers spend rather than earn their money.

4. Apply the lowest possible marginal rates with three brackets such that 50% of the government's gross revenues come from the middle bracket.

5. The goal is to set the brackets with a 25/50/25% split what ever the level of incomes dictate. Even then the percentage changes from one bracket to the next are only 5%. For example:
% …… Taxable Income …Projected Government Revenues
0 ..…… 0 - 25,000………… $0
10 …… 25,001 - 75,000 ….. $50 Billion
15 …… 76,001 - 150,000 … $150 Billion
20 …… 150,001 +………… $100 Billion - 300 Billion

6. Allow for a five-year optional phase-in. Taxpayers may elect to convert to this method through the first five years, and then there is mandatory participation.

7. Keep it simple and do not change it. Do not alienate the taxpayers. Simplicity encourages compliance.