THE PROMISE AND THE CHALLENGE OF TAX REFORM THE PROMISE The 10% and 15% income tax bracket collects over 70 % of personal income tax receipts. This is a very good start toward a Flat Tax. THE CHALLENGE : How to eliminate the remaining tax brackets which account for the remaining 30% of revenue. The new top tax rate of 35% collects less than 1% of revenue surely it could be eliminated with the next increase of the minimum wage. The new rates of 28% and 33% collect 7% of total revenue. They impose a 25% tax surcharge on Small businesses and the self employed who provide over one half the jobs in America. Eliminating Fraud in the Earned Income Tax Credit and in the Medicare program along with Pork Barrel spending in the Transportation Budget would more than pay for eliminating these tax rates The new 25% tax bracket will collect 21% of personal income tax revenue. This tax bracket falls directly on the middle class. This is the place to deliver that long awaited middle class tax cut. In 1997 this tax bracket would have collected 140 billion dollars. Eliminating Itemized deductions would pay for 96 billion leaving a 44 billion revenue shortfall. Surely we can find the remaining 44 billion in unwise and wasted expenditures to completely eliminate this tax bracket. GETTING TO A 10 FLAT TAX One third of the revenue collected from the personal Income tax is devoted to interest payment on the National Debt. If all savings in debt service were returned to taxpayers we could expect tax rates to drop by 1/3 as the National debt is retired. Roland A. Boucher, Chairman