Sen. Edward M. Kennedy (D-Mass.) yesterday proposed a broad, $28 billion revamping of the federal income tax laws that would, among other things, eliminate nearly all personal itemized deductions, lower personal and corporate tax rates and eliminate most tax shelters.
Kennedy, who offered the proposals in a 41-page floor statement, also called for repeal of preferential treatment of much income such as capital gains for individuals and accelerated depreciation and percentage depletion of oil and other minerals.
Kennedy, who is interested in tax law changes but is not a member of the tax-writing Finance Committee, said he offered his proposals to an administration that is committed to "fundamental tax reform."
"It is my hope," Kennedy said, "that these recommendations will provide a useful framework within which consideration and evaluation of various proposals for tax reform can take place."
Treasury Secretary W. Michael Blumenthal said earlier this week that the administration hoped to have tax revisions to the Congress by the end of the summer or early fall.
Kennedy's proposals, some of them still not fully worked out, would substitute tax credits for charitable contributions and home mortgage interest deductions and eliminate all other personal itemized deductions such as interest on loans and medical outlays.
Kennedy said credits are preferable to deductions because credits give all taxpayers the same amount of relief. For example, a $200 tax credit reduces the taxes owed by $200 whether the individual owes $1,000 or $5,000.