The Impact of Tax Reform on Low- and Middle-Income Households

Testimony

The Impact of Tax Reform on Low- and Middle-Income Households

Testimony Submitted to the House Committee on Ways and Means
June 8, 2005

Abstract

This testimony focuses on how the income tax system affects low- and middle-income taxpayers and the potential effects of tax reform. Despite its flaws and some recent erosion, the income tax is highly progressive and is an important source of income support for low-income households. Tax reform could help low- and middle-income households by reducing their tax burdens further, but some so-called fundamental tax reform proposals could shift the tax burden away from those most able to pay to those least able. Moreover, the claimed economic gains from such proposals are speculative at best, based solely on theoretical models that have little relationship to economic reality.

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