Comprehensive, complete tax code rewrite?
Not a good idea. It simply puts off the possible when it comes to improving our tax system.
"Doing major tax reform, tearing the tax system out by it roots and starting from scratch has an enormous amount of attraction, but in many cases it prevents us from doing stuff that is doable now, which is to fix glaring problems in the tax code," Bartlett said in his opening remarks before the Senate Finance Committee's tax simplification hearing on Tuesday, March 10.
"The hope of doing a big once-and-for-all reform, unfortunately, has held hostage legislation that is needed and would incrementally improve the code," he added in his written testimony. This stalling is evident when some members of Congress push to delay certain tax changes so they can be used as sweeteners to get fundamental tax reform through the House and Senate, said Bartlett.
Bipartisanship critical: Lawmakers, however, will need more than a few tax treats to complete something as massive as a reworking of the Internal Revenue Code.
Representatives and Senators need to be willing to work together in a bipartisan manner, Bartlett said.
Yeah, never going to happen, at least not in the 114th Congress.
Bartlett, currently a Fiscal Times columnist and blogger focusing on business and politics, noted such an obstacle in his testimony:
"The dream of a tear-up-the-tax code-and start-over-from-scratch reform is very appealing, but it has never been done in our history. Even a reform as big as those in 1969, 1976 and 1986 appears beyond reach in the present political environment."
Business breaks, extenders hurdle: During questioning, Bartlett also urged enactment of a permanent business research and development tax credit.
Currently the R&D tax credit is part of the continually renewed extenders package. This poses not only political problems -- the latest extension came in December 2014, was made retroactive to the full tax year, and then expired two weeks later.
This continual and messy renewal process, specifically with regard to R&D, is that the tax break fails to achieve its purpose of stimulating additional innovation and research and "is instead a reward for what companies would have done anyway," Bartlett said.
Bartlett was just one of four witnesses who spent almost two hours discussing tax simplification with the Senate panel. You can check out the video of the full hearing, as well as read the prepared testimony of all the witnesses at the Committee's hearing Web page.
How would you reform the tax code? The tax-writing Senators, however, want you to do more than just watch. They want you -- and me and everyone -- to make suggestions on how to reform the tax code.
Senate Finance Committee Chairman Orrin Hatch (R-Utah) and Ranking Member Ron Wyden (D-Ore.) today announced a bipartisan effort to get tax reform ideas from Jane and Joe Taxpayer, as well as from other stakeholders, i.e., businesses, trade associations, industry organizations, advocacy groups, and, yes, even lobbyists. OK, Hatch and Wyden didn't say lobbyists, but you know they will chime in.
The goal is to get additional input, data, and information that can be used by the Senate committee's five bipartisan tax working groups. These groups already are analyzing existing tax law and examining policy trade-offs and available reform options.
"By opening up our bipartisan working groups to public input, we hope to gain a greater understanding of how tax policy affects individuals, businesses, and civic groups across our nation," the SFC leaders said in the announcement of the public comments component. "In doing so, we will also equip our working groups with valuable input, and we hope these suggestions will help guide the groups through the arduous task of putting forth substantive ideas to reform the tax code in each of their areas."
If you have some thoughts, submit your comments via email to the bipartisan group or groups that relate to the area of interest at the following addresses:
Individual Income Tax -- Individual@finance.senate.gov
Business Income Tax -- Business@finance.senate.gov
Savings & Investment -- Savings@finance.senate.gov
International Tax -- International@finance.senate.gov
Community Development & Infrastructure -- CommunityDevelopment@finance.senate.gov
More details on submitting tax reform comments can be found at the Senate Finance Committee website.
Senate version of earlier effort: Sound familiar? Probably to hard-core tax geeks.
During the 113th Congress, then House Ways and Means Chairman Dave Camp (R-Mich.), who retired at the end of the last session, and former Senate Finance Chairman Max Baucus (D-Mont.), who resigned his Senate seat to become ambassador to China, did the same.
No word yet as to whether Hatch and Wyden will conduct a national tour a la the Max and Dave Tax Reform Road Show.
You also might find these items of interest: