New America's Tax Reform Plan

The tax code is backwards in many ways. It discourages saving, job creation, and economic growth while encouraging consumption, energy dependence, and environmental degradation. It has become less progressive at a time when income inequality is growing and it bestows the largest targeted tax breaks on those who need them least. It has failed to keep up with changes in the global economic environment, harming U.S. competitiveness. It is highly complex, non-transparent, and it does not raise enough money to pay for government spending. Overall, the tax code is ill suited to meet the needs and opportunities of the 21st century.

The New America Foundation’s comprehensive tax plan is structured to address these shortcomings by dramatically altering how we raise federal revenues. The plan consists of five major components:

1. Replace the payroll tax with a progressive consumption tax
2. Integrate the individual and corporate income taxes in exchange for taxing all forms of income the same
3. Reduce and reform tax expenditures
4. Replace the estate tax with an inheritance tax
5. Create a new revenue stream from environmental taxes

For the full tax reform proposal, please see the attached PDF below.