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US Senators Want Clean Sweep Of Tax Code

Friday, February 26, 2010

As Congress readies for the inevitable partisan debate over how best to address the expiring 2001 and 2003 tax cuts, US Senators Ron Wyden and Judd Gregg have introduced legislation that would, if enacted, perform the most widespread clean-up of the US tax code since the tax reform enacted under the Reagan administration in 1986.

The "Bipartisan Tax Fairness and Simplification Act of 2010" aims to clear out the tangled web of nearly 10,000 exemptions, deductions, credits and other preferences that currently clutter the US tax code in a bid to create a simpler and fairer system.

“Senator Gregg and I are demonstrating that there is room for Democrats and Republicans to agree on tax reform,” said Wyden, an Oregon Democrat. “By simplifying the tax code and scaling back tax breaks for special interests, we can give everyone an opportunity to get ahead. Businesses of all sizes will be in a better position to compete and grow jobs. Working families will keep more of their hard earned dollars and everyone will spend a lot less time filling out tax forms.”

"For far too long, our tax system has been overly complicated, burdensome and unfair to taxpayers and to small businesses that are the economic engines of our nation," added Gregg, a New Hampshire Republican. "This investment-oriented proposal will bring us back to common-sense tax laws that encourage people to create jobs and make our nation more competitive."

A key element to the proposal is a flat 24% corporate tax rate, which would bring the US corporate tax rate, currently the second-highest among the major industrialized nations, below the rates levied in key competitors in the European Union, Canada, Australia and elsewhere.

The Senators say that their bill is set out along similar lines to the bipartisan Tax Reform Act of 1986, which funded tax relief by eliminating a number of special interest tax breaks.

For individuals, the bill would:

  • Eliminate the Alternative Minimum Tax;
  • Reduce the number of individual tax brackets from the current six to three: 15%, 25%, and 35%;
  • Increase the standard tax deduction almost three-fold, reducing individual tax bills and reducing record-keeping obligations;
  • Enable a simple one-page 1040 tax return form with the option that taxpayers can request that the IRS prepare a tax return for them to review and sign.

For business, the bill would:

  • Allow more than 95% of small businesses – those with gross annual receipts of up to USD1m – to permanently expense all equipment and inventory costs in a single year;
  • Reduce the top corporate tax rate and replace the existing six corporate rates and eight brackets with a single flat rate of 24%;
  • Eliminate a number of specialized tax breaks that favor one business sector or group of individuals over another, thus making the tax code simpler and fairer;
  • Retain preferential treatment for capital gains in order to encourage investment, by creating a new 35% exclusion and a progressive rate structure for dividend and long-term capital gains income. The bill would also cut the holding period to six months from one year for the first USD500,000 of a taxpayer’s capital gains income;
  • Repeal the rule that allows US companies to defer taxes on their foreign income;
  • Create a more even playing field between corporate debt and equity by cutting the value of inflation from a corporation’s interest deduction on debt.

"This proposal echoes the successful tax reform championed by President Reagan and Senator Bill Bradley during the mid-1980s, Gregg continued. "And it is time that we return to this sort of common-sense, bipartisan approach.”

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The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




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