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Tax Reform Done the Right Way


Brandon Arnold
August 1, 2013

The Senate Finance Committee received some negative attention last week when it solicited comments on tax reform from Senators with the odd stipulation that any such submissions would be kept confidential for 50 years. A clandestine submission process certainly runs counter to the notion of a transparent, open government.  And this is particularly true given the complicated and burdensome nature of our tax code, many provisions of which are carve-outs and exemptions designed specifically by and for special interest groups.

The Committee should open up this process, not only by making all comments publicly available, but also by soliciting opinions from all Americans. Its counterpart in the House, the Ways & Means Committee, did exactly this and received a multitude of comments from various individuals and groups. The Joint Committee on Taxation summarized these comments in a report that can be found here.

But there are even bigger challenges than secrecy. Before it continues to pursue fundamental tax reform, the Senate Finance Committee should commit to an end product that is revenue neutral. Politically speaking, this is the only way tax reform has a chance to proceed in the divided Congress.  But more importantly, committing to revenue neutrality effectively removes the possibility that the tax code overhaul would result in a system that causes even more economic drag than the current code. In short, the goals of tax reform should be fairness, simplicity and economic growth – not an expansion of the size of government.  Fourteen Republican Senators made this same point in a letter they sent last week to Finance Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT). The letter also wisely noted that there was bipartisan agreement on the principle of revenue neutrality before the successful tax reform efforts of 1986 – a fact that should surprise no one.

Partisan tensions are high right now on Capitol Hill and passing even the simplest bill can be difficult.  If a major legislative initiative like comprehensive tax reform is going to gain traction, it’s important to set fair and appropriate ground rules now.  That means committing to a transparent reform process with a goal of revenue neutrality.


 

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