The factors guiding recent tax reform efforts are different from those that influenced the debate in 1986, the last time the Internal Revenue Code received a major overhaul. The development of the internet has changed the traditional views of tax rules, administration, and compliance. Design of a tax system today should provide similar incentives for intangible and tangible property, address a broader range of business entities, and consider that people work and live longer.

Protecting taxpayer data in digital form is more important, as is the tax treatment of digital transactions that are becoming increasingly more difficult to source. A set of tax principles can help in tax system design to better ensure administrability, fairness, and economic efficiency. Like tax systems, tax principles should be evaluated regularly to ensure they address today’s ways of living and doing business.


Tax Policy Concept Statement No. 1, Guiding Principles of Good Tax Policy: A Framework for Evaluating Tax Proposals (TPCS-1), is the first in a series of AICPA statements, originally issued in 2001, intended to aid in the review and development of both existing tax rules and tax legislation.

TPCS-1 was modernized in 2017 for several reasons. First, the AICPA Tax Executive Committee (TEC) acknowledged the need to expand the application of the guiding principles beyond the federal level to consider the shared tax base of the global economy. Further, the TEC recognized that the principles should reflect changes in the way individuals conduct business—more specifically, the need to keep pace with technical and commercial developments. Finally, in this day of security breaches, the challenges of protecting taxpayer information had to be integrated into the principles.

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In comparing the 2001 and 2017 versions, the most obvious change is the addition of two new principles—Principle 5, Information Security, and Principle 11, Accountability to Taxpayers—as well as the change in the title of Principle 4 from Economy in Collection to Effective Tax Administration. Certainly, the importance of information security reflects the times in which we live, where 17.6 million U.S. residents, 7% of those ages 16 or older, experienced some form of identity theft in 2014 (Bureau of Justice Statistics Report, 9/27/15, available at

The new Principle 5 discusses not only identity theft but also the responsibility of all parties involved in tax administration to keep information secure. Accountability to taxpayers was added to recognize that transparency and the ease of providing information to the public at low cost supports public awareness that, in turn, enables a more well-informed society.

The modernization of the language is evident throughout the revision. For example, the addition of language referring to the “appropriate use of secure technology” to Principles 3 and 4 reflects the extension of methods of payment since 2001. The expansion of the principles to apply to tax policy beyond the federal level is emphasized in Principle 8, Economic Growth and Efficiency, as is added emphasis on neutrality to ensure that enactment of laws will not discriminate in favor of or against ways of doing business.

Increased attention to the tax gap is reflected in Principle 10, Minimum Tax Gap, and Principle 12, Appropriate Government Revenues, which has been significantly expanded. In addition to noting the need for flexibility and stability as well as regular review of tax systems to ensure the appropriateness of new business models, a discussion of the complementary nature of a tax system among relevant jurisdictions was included. Specifically, the need to consider the interaction of tax bases in a global economy and the effect that changes in one tax system have on other tax systems was added to the narrative. Finally, in addition to expanding from 10 principles to 12, the recently revised statement adds a table illustrating the alignment of TPCS-1 with the principles and criteria used by the Organisation for Economic Co-operation and Development, Congress’s Joint Committee on Taxation, and the U.S. Government Accountability Office to analyze tax systems.

Following is a brief explanation of the 12 guiding principles and a discussion of their value in identifying weaknesses in current rules and evaluating new tax proposals.