January 24, 1996
TO: BOARD OF GOVERNORS No. 5-96
FEDERAL LEGISLATION COMMITTEE No. 2-96
PUBLIC INFORMATION COMMITTEE No. 3-96
RE: KEMP COMMISSION REPORTS ON TAX REFORM
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The National Commission on Economic Growth and Tax Reform (called the "Kemp
Commission" for its chairman, Jack Kemp) was appointed by Senate Majority Leader Dole and
Speaker Gingrich to make recommendations for fundamental tax restructuring. The
Commission issued its report last week.
The Commissions report does not make recommendations for a specific tax reform
proposal. Rather, it recommends that tax reform incorporate a number of general principles,
including: (1) a single, low tax rate with a generous personal exemption, and with retention of
only those deductions with "important social and economic consequences"; (2) strengthened
incentives for private retirement saving; (3) deduction of payroll taxes; and (4) deduction rather
than capitalization of business expenses.
To eliminate the bias against saving and investment, the report recommends that the tax
system (1) either let savers deduct their saving or exclude the returns on the saving from
taxable income; (2) end double taxation of businesses; and (3) abolish separate taxation of
capital gains.
Tax reform is likely to be a major issue in this years Presidential campaign, and
hearings are expected in both House and Senate. We will keep you informed of developments.
For those members with access privileges, this memo can be found on ICINet. For
additional information, please contact as follows:
Legislative Affairs 202-326-5890
Media Relations 202-326-5860
ICINET 202-326-5933
Michael Stern
Legislative Representative
for Taxation