USA Income Taxes Higher, Consumption Taxes Lower Than OECD Peers Government Tax Revenue as % of GDP, USA vs. OECD Average, 2007 Tax Type USA OECD Average Vallance (USA - OECD) Individual Income Taxes 10.8% 94% 1.4% Property Taxes 3.1 1.9 1.2 Other 47 S)(0) | -0.3 Corporate Income Taxes 3.1 Che -0.8 Social Security Taxes 6.6 9.1 -2.9 Value Added Taxes -- 6.5 KP Source: OECD Tax Database. i USA Inc. | What Might a Turnaround Expert Consider? 409 Tax Policy Options From Report of the National Commission on Fiscal Responsibility and Reform e Consolidate the tax code into three individual income rates (15% / 25% / 35%) and one corporate income rate (26%) e Eliminate the complex tax codes such as AMT', PEP2, and Pease? e Triple standard deduction to $30,000 ($15,000 for individuals) e Repeal state & local tax deduction and miscellaneous itemized deductions e Limit mortgage deduction to exclude 2™ residences, home equity loans, and mortgages over $500,000 e Limit charitable deduction with floor at 2% of Adjusted Gross Income e Cap income tax exclusion for employer-provided healthcare at the amount of the actuarial value of Federal Employees Health Benefits Plan (FEHBP) standard option e Permanently extend the research tax credit for businesses e Eliminate and modify several business tax expenditures (domestic production deduction / LIFO* method of accounting / energy tax preferences for the oil and gas industry / depreciation rules) e International tax reform including a territorial system® Note: 1) AMT is the Alternative Minimum Tax; 2) PEP is Personal Exemption Phase-out designed to eliminate personal income exemptions for high earners; 3) Pease is a similar phase-out, but instead of applying to personal exemption, it applies to most of the itemized deductions of a taxpayer's claims (mortgage interest, charitable gifts, state & local taxes paid, etc.); Pease is named after Representative Donald Pease (D-OH) who pushed for its enactment in 1990. 4) LIFO is Last In, First