Top tax writers renew pledge for tax code revamp
The heads of the two tax-writing committees in Congress brushed aside skeptics on Monday and pledged in an opinion piece published in the Wall Street Journal to seek a bipartisan tax code overhaul despite fierce political headwinds.
Democrat Max Baucus, the Senate Finance Committee chairman, and Republican Dave Camp, who heads the House of Representatives Ways and Means Committee, renewed their vow to scour the tax code for unfair loopholes and to discuss it all in public.
Any effort to rewrite the tax code faces an uphill fight in Congress, with Democrats and Republicans often miles apart on tax policy. Many lawmakers in both parties advocate tax reform, but offer vastly different visions for change.
Although not stated in the piece, Baucus and Camp have said they want to pass tax reform legislation this year.
The two lawmakers said that while they come from different parties, they agreed that "America's tax code is broken."
They said they have agreed on three general principles:
- Tax reform would close special-interest loopholes to help lower rates and would ensure that low-income and middle-income Americans would pay no more in taxes than they do under current law.
- It would level the playing field for employers, noting that while the current corporate tax rate is the highest in the world, some of America's largest corporations have paid zero taxes.
- It would seek parity for small businesses with the goal of ensuring that reform helps small family businesses create jobs and compete as much as it helps large companies.
"No cutting deals behind closed doors," the two wrote, detailing their years of weekly meetings to plot a course. "We crowd into a room with our policy experts to chart a path to our mutual goal - comprehensive tax reform."
The U.S. tax code is nearly 74,000 pages long, according to tax publisher Wolters Kluwer. That's up from 400 pages at the code's inception in 1913, and about 26,000 pages in 1984.
The code was last thoroughly revamped in 1986, when Republican President Ronald Reagan signed major changes into law crafted by a Democratic-led House and a Republican-controlled Senate. Big changes then included lowering individual tax rates and closing corporate loopholes and tax shelters.
Many experts say the task is more difficult now in large part because tax rates were higher and dodgy corporate tax shelters were more rampant before the last reform effort.
Lobbying is already underway by groups seeking to protect existing tax breaks like the mortgage interest deduction used by many Americans and manufacturing tax deductions used by businesses.
Lawmakers also differ on the issue of whether any overhaul should increase overall U.S. tax revenues, with many Republicans saying it should not and many Democrats saying it should.
"There are skeptics who question the prospects for bipartisan tax reform. We know we face some fierce headwinds. People from across the spectrum are trying to turn tax reform into a political weapon, which could end up killing any chance at success. We can't let that happen," Camp and Baucus wrote.
Camp and Baucus said they will "make sure that companies can't avoid paying tax on income they earn in the U.S. by pretending that they earned it in an overseas tax haven instead."
President Barack Obama and many fellow Democrats back tightening rules for foreign income earned by big corporations. Obama is expected to revive many of these ideas when he submits his 2014 budget proposal on Wednesday.
Camp and Baucus said they also would look to close loopholes such as one allowing lawyers and other business entities to avoid payroll taxes.
© Copyright 2013 Thomson Reuters.