The American Institute of Certified Public Accountants (AICPA) yesterday released its nonpartisan tax reform report: Understanding Tax Reform: A Guide to 21st Century Alternatives (113 pages).  The Executive Summary concludes with a listing of ten guiding principles of sound tax policy:

The AICPA recommends employing the following, widely recognized indicators of good tax policy to analyze proposed changes. These ten guiding principles are equally important, and should be considered both separately and together when evaluating the current system and reform proposals:

1. Simplicity. The tax law should be simple so that taxpayers understand the rules and can comply with them correctly and in a cost-efficient manner.
2. Fairness. Similarly situated taxpayers should be taxed similarly.
3. Economic Growth and Efficiency. The tax system should not impede or reduce the productive capacity of the economy.
4. Neutrality. The effect of the tax law on a taxpayer’s decisions as to how to carry out a particular transaction or whether to engage in a transaction should be kept to a minimum.
5. Transparency. Taxpayers should know that a tax exists and how and when it is imposed upon them and others.
6. Minimizing Noncompliance. A tax should be structured to minimize noncompliance.
7. Cost-Effective Collection. The costs to collect a tax should be kept to a minimum for both the government and taxpayers.
8. Impact on Government Revenues. The tax system should enable the government to determine how much tax revenue will likely be collected and when.
9. Certainty. The tax rules should clearly specify when the tax is to be paid, how it is to be paid, and how the amount to be paid is to be determined.
10. Payment Convenience. A tax should be due at a time or in a manner that is most likely to be convenient for the taxpayer.

The American Institute of Certified Public Accountants does not take a position on the “best possible solution” to reforming the current federal income tax system. We do, however, encourage an in-depth debate of the issues, undertaken through an organized and logical process, with the goal of enacting “good tax policy” reforms in the near future. As the Administration and Congress consider federal tax reform, the unifying goals should be established now to make the effort one that is rational, thoughtful and lasting.