Tax reform -- not just cuts -- needed

Tax reform is suddenly getting a lot more attention as a way to fix the ailing U.S. economy, as well as address the problems with government deficits. That's because even with the lower tax rates, your tax bill might rise due to closing loopholes and the removal of deductions and credits."The tax code is very inefficient," said Federal Reserve Chairman Ben Bernanke said in an interview with "60 Minutes" this week. "Both the personal tax code and the corporate tax code. By closing loopholes and lowering rates, you could increase the efficiency of the tax code and create more incentives for people to invest." There are as many different ways to simplify the tax code as there are IRS forms. But the basics are likely to revolve around eliminating the huge range of deductions and income that gets special treatment under current law, allowing for lower tax rates across the board.While lowering income and corporate tax rates sounds like a boon for workers and companies, experts say the loss of breaks and deductions will mean that some people will have higher tax bills, significantly higher in some cases. Those who don't take advantage of some of the advantages of the current system, such as those who don't itemize, are more likely to have their tax bills cut in the process. Still, the current political environment, with a divided Congress and the looming presidential election, doesn't lend itself to the kind of compromise needed to accomplish such radical reform, according to most experts.
Although tax reform is backed by promising leading officials, only time will tell as we push forward from the current recession.