Tags: Senate | tax | reform | 1986

Where Is Obama on Tax Reform?

By    |   Wednesday, 11 Feb 2015 07:48 AM

Before a modest turnout of Senators, the Senate Finance Committee, chaired by Sen. Orrin Hatch, R-Utah, held a hearing Feb. 10 on reforming the federal tax code. The hearing reviewed the history of tax reform as practiced when the last major bill was enacted in 1986.

The witnesses were former Sens. Bob Packwood, R-Ore., who chaired the committee at that time, and Bill Bradley, D-N.J., the self-styled "zealot" who promoted the concept of tax reform and participated in the small group on Senate Finance that wrote it behind closed doors in about a week with virtually no hearings on the bill that finally became law.

In his opening statement, Hatch said he has been promoting tax reform and the Republican staff has produced a report on the need for it. He then listed seven principles that will guide his work on tax reform. A reader might think that seven principles are too many, but as principles they seem very sensible, even if they might be hard to find in the work of the tax-writing committees and their powerful staff.

The principles are: 1) Economic Growth, 2) Fairness, 3) Simplicity, 4) Revenue Neutrality, 5) Permanence, 6) Competitiveness and 7) Promotion of Savings and Investment.

In a lengthy statement, ranking Democrat Ron Wyden of Oregon expressed hope that a bipartisan bill could be fashioned, as it was in 1986, based on a balance between the interest of Republicans in flattening the tax brackets and of Democrats in fostering fairness by imposing taxes on entities that had been able to escape taxation altogether.

Packwood and Bradley followed with engrossing accounts of their experiences as tax reformers in 1986, and they gave their own renditions of the principles that should be applied, which were generally simpler versions of the list compiled by Hatch. Reformers of a different stripe might be startled by Packwood's forthright statement that the 1986 bill was written secretly and quickly by a handful of senators and key White House and committee staff working behind closed doors. Sticklers for the niceties of the Constitution can reflect on the fact that whereas tax legislation is supposed to originate in the House, the 1986 bill was effectively a Senate product.

Bradley recalled that he saw his career as a depreciating asset and that President Reagan had labored in the 90 percent tax bracket. The witnesses differed in the importance they attached to presidential leadership, with Packwood calling Reagan's role helpful and Bradley finding it "essential." Packwood differed strongly with the administration view that a bill be limited to business taxes.

This writer would suggest that the hearing might have overly glamorized the achievements of the 1986 Act, which, after all, created an additional tax system in the form of the Alternative Minimum Tax. The effect of the hearing should be to put pressure on the White House to decide whether Obama wants to get actively involved in tax reform.

(Archived video can be found here.)

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Robert-Feinberg
Before a modest turnout of Senators, the Senate Finance Committee, chaired by Sen. Orrin Hatch, R-Utah, held a hearing Feb. 10 on reforming the federal tax code. The hearing reviewed the history of tax reform as practiced when the last major bill was enacted in 1986.
Senate, tax, reform, 1986
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2015-48-11
Wednesday, 11 Feb 2015 07:48 AM
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