Camp and Baucus: Tax Reform is Alive and Well
Getting Congress to take on tax reform will be difficult, but the two lawmakers in charge of the tax-writing committees seem to be committed to reforming our nation's inefficient and overly-complicated tax code. In a joint op-ed in today's Wall Street Journal, Senate Finance Committee Chairman Max Baucus (D-MT) and House Ways and Means Committee Chairman Dave Camp (R-MI) write that despite the ideological differences between the two parties, there is a bipartisan agreement on the need for comprehensive tax reform. The op-ed is a very encouraging sign that the chairs continue to be focused on producing tax reform legislation.
In 2013, the federal government will forgo nearly $1.3 trillion in revenues from individuals and businesses due to the many tax expenditures that litter the tax code, according to the latest estimate from the Joint Committee on Taxation. Baucus and Camp point out that the last time Congress took a serious look at the tax code was more than 25 years ago, and many tax provisions have been added since then. Furthermore, there has been little review to see what provisions accomplish their intended goals effectively and efficiently. It is Baucus's and Camp's hope that by engaging the public, they can overhaul the tax code in a fair and rationale manner.
We've held more than 50 hearings and heard from hundreds of experts. The House Ways and Means Committee has released several discussion drafts on pieces of the tax reform puzzle and formed working groups so committee members can dive into the details of the code. The Senate Finance Committee is on a parallel track, reviewing discussion papers and collecting feedback from members and stakeholders.
In the coming weeks, we will give you the opportunity to provide your input as well. No need to travel to Washington. Through the use of social media, we will enable everyone to participate directly.
We are dedicated to writing bills in an open and transparent fashion. No cutting deals behind closed doors. You get a say, employers get a say, and our colleagues—your representatives and senators—will get a say.
In taking up reform, Baucus and Camp lay out three principles to guide the process. They elaborate:
The first is a boost for America's families. People don't mind paying their share as long as they know they're not getting the short end of the stick. Simplifying the code means regular families will be on a level playing field with those who can afford high-price tax advisers.
We've agreed that tax reform should result in a system that is as progressive as the current one. Tax reform will close special-interest loopholes to help lower rates. We will ensure that low-income and middle-income Americans will pay no more taxes than they do under current law.
The second principle is to level the playing field for U.S. employers. The current U.S. corporate tax rate is the highest in the world. Yet in recent years, some of America's largest corporations have paid zero tax. The current system picks winners and losers and puts the U.S. companies at a disadvantage in the global economy, a situation that hurts job creation. Tax reform must make our companies more competitive in the global economy.
The third principle is parity for small businesses. As a Montanan and a Michigander, we know that small businesses are the heart of most communities and of the American economy. We will work to ensure that any tax reform plan does as much to help a small family business create jobs and compete as it does for a large company.
These are solid goals for reform, and ideally it would also raise more revenue to put the debt on a downward path as a percent of GDP. Other tax reform plans, such as those from the Fiscal Commission and the Domenici-Rivlin Task Force were able to broaden the tax base, lower marginal rates, and raise significant revenues as well. We know that our current trajectory of debt is unsustainable and it will be difficult to put debt on a downward path without a mix of both additional revenue and spending reductions. We commend Baucus and Camp on their effort and hope more members of Congress follow their lead to simplify the code, promote growth, and get our fiscal house in order.