Tax reform has been a subject of debate in the past several Congress and many policymakers agree that the U.S. tax system is in need of reform. Recent tax reform proposals seek to lower tax rates, broaden the tax base, and provide a simpler and fairer tax system overall. The difficulty with tax reform, however, is agreeing on the crucial details needed to refresh the tax system. How far should rates be lowered? Which tax provisions should be modified or eliminated? Should the reformed tax system be income-based or consumption-based? What are the objectives regarding federal deficits and the debt? To assist Congress as it continues to debate tax reform options, this report provides a review of recent legislative proposals introduced since the 113 th Congress. Policymakers often speak of the goal to achieve comprehensive reform of the entire tax code. If comprehensive tax reform is not deemed feasible, Congress could choose to consider reforms to certain parts of the code as an alternative. For example, the corporate tax system could be reformed first and the individual tax system, and perhaps payroll tax system, at a later date. Similarly, Congress could choose to reform only portions of the corporate system, such as just the international aspects of the corporate system. Alternatively, Congress could choose to evaluate business-only options, which would involve changes to the corporate system and portions of the individual system under which "pass-through" business income generated by sole proprietors, partnerships, limited liability companies, and S corporations is taxed. Before reviewing recent reform proposals, it may be helpful to review the three criteria by which economists often evaluate tax policy—equity, efficiency, and simplicity. Equity concerns the fairness of a particular tax system. Economists rely on two concepts of equity—horizontal equity and vertical equity. Horizontal equity holds that taxpayers with similar incomes should face similar tax burdens. Vertical equity examines the distribution of tax burdens across different income groups. Under an ability-to-pay standard, vertical equity suggests that taxpayers in higher income groups should pay more. Efficiency relates to the degree to which the tax system distorts economic decision making. Low marginal tax rates applied to a broad tax base, with few exclusions or exemptions, tend be more economically efficient. S implicity considers the amount of resources that must be committed to administering, enforcing, and complying with the tax system. Tradeoffs may exist between these three objectives. Tax reform continues to be actively debated in the 115 th Congress. Although no comprehensive tax reforms have been introduced into legislation yet in the 115 th Congress, two 2016 reform proposals appear to be at the forefront of current congressional debates—the House GOP's "A Better Way" tax reform proposal, released in June, 2016, and President Trump's campaign reform proposal, released in September 2016. The House GOP's tax reform proposal is intended to be revenue neutral. On the individual side, the proposal, also referred to as the tax reform "blueprint," calls for consolidating the current seven tax rates on individual labor income into three: 10%, 20%, and 25%. The proposal also would reduce taxes on active pass-through business income, dividends, and capital gains; increase the standard deduction; repeal the Affordable Care Act (ACA)-related tax provisions; and repeal the alternative minimum tax (AMT). To offset the revenue loss associated with these proposals, the blueprint calls for the repeal of all itemized deductions, except the deduction for charitable contributions and mortgage interest; the repeal of personal exemptions; and the repeal of various and to-be-determined tax expenditures. On the corporate side of the tax code, the House blueprint proposes reducing the corporate tax rate to 20% and repealing the corporate AMT. Investment would be eligible for expensing, although the interest on new debt would not be deductible. Other fundamental changes include implementing a territorial tax system and a border adjustment (exports would not be subject to tax; imports would be subject to tax). Currently held untaxed overseas earnings would be subject to a deemed repatriation tax of 8.75% on cash and cash-equivalents, and 3.5% on earnings held in all other forms. Most current corporate tax provisions would be repealed with the exception of net operating loss (NOL) carryforwards, last-in-first-out (LIFO) accounting, and the research and design (R&D) tax credit. President Trump's campaign proposal is also intended to be revenue neutral. Similar to the House plan, the President's campaign proposal calls for consolidating the seven tax rates on individual income into three: 12%, 25%, and 33%. The proposal also would increase the standard deduction, limit deductions, and repeal the 3.8% unearned Medicare tax, as well as the AMT. All businesses (corporate and pass-through) would be subject to a 15% income tax. The income of corporations with overseas operations would no longer be eligible for deferral, and previously earned foreign-source income would be subject to a 10% deemed repatriation tax, payable over 10 years. Most corporate tax expenditures would be eliminated except for the R&D tax credit. As of the date of this report, no legislation has been introduced that would provide a comprehensive reform of the individual and corporate income tax systems. Two bills have been introduced in the 115 th Congress thus far that would repeal and replace the income tax system. The Fair Tax Act of 2017 ( H.R. 25 and S. 18 ) proposes to repeal the individual income tax, the corporate income tax, all payroll taxes, the self-employment tax, and the estate and gift taxes. These taxes would be effectively replaced with a 23% (tax-inclusive, meaning that the rate is a proportion of the after-tax rather than the pre-tax value) national retail sales tax. The tax-inclusive retail sales tax would equal 23% of the sum of the sales price of an item and the amount of the retail sales tax. Every family would receive a rebate of the sales tax on spending amounts up to the federal poverty level (plus an extra amount to prevent any marriage penalty). The Social Security Administration would provide a monthly sales tax rebate to registered qualified families. The 23% national retail sales tax would not be levied on exports. The sales tax would be separately stated and charged. Social Security and Medicare benefits would remain the same with payroll tax revenue replaced by some of the revenue from the retail sales tax. States could elect to collect the national retail sales tax on behalf of the federal government in exchange for a fee. Taxpayer rights' provisions are incorporated into both acts. The sales tax would sunset at the end of a seven-year period beginning on the enactment of this act if the Sixteenth Amendment is not repealed. The amendment provided Congress with the "power to lay and collect taxes on incomes." The Tax Code Termination Act ( H.R. 29 ) would terminate the Internal Revenue Code (IRC), and declares that any new tax system be a simple and fair system that (1) applies a low rate to all Americans; (2) provides tax relief for working Americans; (3) protects the rights of taxpayers and reduces tax collection abuses; (4) eliminates the bias against savings and investment; (5) promotes economic growth and job creation; and (6) does not penalize marriage or families. The 114 th Congress did not enact comprehensive tax reform or legislation to replace the income tax system. No legislative proposals were introduced in the 114 th Congress to comprehensively reform the individual and corporate income tax systems. As previously discussed, the House majority released a tax reform proposal blueprint as part of their "A Better Way" policy agenda in June 2016and President Trump released a campaign tax reform proposal in September 2016. Please see " Tax Reform in the 115th Congress " for more details on these proposals. Several proposals to replace the income tax system were introduced in the 114 th Congress: the Fair Tax Act of 2015 ( H.R. 25 / S. 155 ), the Flat Tax Act ( H.R. 1040 ), and the Simplified, Manageable, and Responsible Tax (SMART) Act ( H.R. 1824 / S. 929 ). The Fair Tax Act of 2015 would have replaced the current income tax system with a national retail sales tax. Both the Flat Tax Act and the SMART Act would have imposed a flat tax system that is structurally similar to the Hall-Rabushka flat tax proposal, taxing wages and business taxable income. Please see " Replace the Income Tax System 's" Fair Tax Act of 2017 ( H.R. 25 / S. 18 ) for a summary of The Fair Tax Act of 2015. This proposal would have authorized an individual or a person engaged in business activity to make an irrevocable election to be subject to a flat tax (in lieu of the existing tax provisions). It also would have repealed estate and gift taxes. For individuals not engaged in business activity who selected the flat tax, their initial tax rate would have been 19%, but after two years this rate would have declined to 17%. The individual flat tax would have been levied on all wages, retirement distributions, and unemployment compensation. An individual's taxable income also would have included taxable income of each dependent child who has not attained age 14 as of the close of such taxable year. The flat tax would have had "standard deductions" equal to the sum of the "basic standard deduction" and the "additional standard deduction." The basic standard deduction would have depended on filing status: $32,496 for a married couple filing jointly or a surviving spouse, $20,739 for a single head of household, or $16,248 for a single person or a married person filing a separate return. The additional standard deduction would have been an amount equal to $6,998 for each dependent of the taxpayer. All deductions would have been indexed for inflation using the consumer price index (CPI).