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How to improve the tax code is the subject of much debate. Proponents of reform often call for increasing fairness and simplicity. But people define those concepts in different ways.
Any further efforts to address marriage penalties should be focused on two-earner couples and structured to avoid increasing marriage bonuses.
Policymakers use the tax system to raise revenue and to promote social policy goals. For example, tax breaks may be provided to encourage home ownership.
Policymakers should broaden the tax base by limiting tax preferences that do not efficiently achieve important policy goals.
Policymakers should limit the increasing number of taxpayers subject to the taxation of Social Security benefits to better protect the benefits of people who have no or limited additional retiremen
A progressive income tax is the preferred method of raising revenue at the federal and state levels. Other sources, such as a consumption tax, may be needed.
Most states and localities generate a significant portion of state and local revenue from the taxation of retail sales. Such taxes are attractive because they are relatively easy to administer.
Due to their regressive nature, raising state and local sales taxes should not be the first choice for increasing tax revenues.
States and localities should include services in the taxable base to reduce regressivity and improve neutrality.
Exemptions from state retail sales taxes should be narrowly designed to reduce their regressive nature and avoid pyramiding.