On Jan. 31, the Center for American Progress unveiled its progressive tax plan, titled “A Fair and Simple Tax System for Our Future: A Progressive Approach to Tax Reform.” This comprehensive plan provides an alternate vision for tax reform based on the themes of fairness, simplicity, and opportunity through tax policy. The release of this plan is part of a broader Progressive Policy Series the Center is publishing aimed at outlining responsible policy proposals and proposing steps lawmakers can take to enact them. The Center chose to work on a fair, simple and progressive tax plan as a response to what it believes are irresponsible policies pursued by President Bush and Congress. In his first term, Bush pushed through tax cuts that primarily benefited the wealthiest, making our federal tax system increasingly complicated and unfair. He has taken away revenue sources necessary to fund both his policies and national policies that were created and put in place before his time. And although Bush is not expected to push fundamental tax changes in Congress until late this year at the earliest, he has made it known he wants tax reform to be a central priority during his second term. The progressive tax policies promoted by the Center for American Progress would restore fairness, simplify the tax code, and increase economic opportunity. The Center's plan would tax each source of income fairly, reduce the dependence on payroll taxes (which are regressive), and enhance the take-home pay of lower-income taxpayers. To simplify the tax code, the authors of the plan propose reducing the number of income tax brackets from six to three, and taxing each progressively at 15, 25 and 39.6 percent. The plan also closes corporate and individual tax loopholes, and eliminates the Alternative Minimum Tax. To increase economic opportunity through the tax code, the plan restores fiscal discipline by addressing the record deficit situation, working to close the current fiscal gap, and offering Americans new opportunities to save and create wealth for retirement. The Center proposes getting rid of the “upside-down deduction-based incentive and replace it with an across the board 25 percent refundable tax credit for retirement savings.” This would offer Americans an incentive to save for their retirement. The Center’s tax plan would keep the income tax progressive, which is an important way to level the playing field and increase equity in our society. It reduces taxes for approximately 70 percent of taxpayers — those making less than $200,000 annually — and provides an average tax cut of more than $600. Those who make over $200,000 would see some tax increase. Most importantly, these specific policies end up reducing the deficit by nearly $500 billion over the next ten years, which is key given new CBO projections putting the FY2005 deficit at well over $400 billion. It is clear the fiscal health of this nation would benefit from proposals such as the ones put forth in the Center’s progressive tax plan.