Thursday, September 13, 2012
One of the services of the Simpson-Bowles Commission was to set out a path for tax reform, with lower income tax rates and removal of many tax preferences or, to use the commission's term, tax expenditures.
It's an approach that has been tried before and worked. Ronald Reagan called for such a reform in 1984 and, after much negotiating, it was hammered out in 1986. Lead roles were played by Treasury Secretary James Baker; the Democratic chairman of the House Ways and Means Committee, Dan Rostenkowski; and the Republican chairman of the Senate Finance Committee, Bob Packwood. ...
Mitt Romney has endorsed a similar procedure. So has Paul Ryan, who included it in the budget he steered to passage in the House.
Romney and Ryan have been criticized for not providing specifics on which tax preferences they would eliminate. But neither did the Simpson-Bowles Commission, which said that "the precise details and exact transition rules should be worked out in a variety of ways by the relevant congressional committees and the Treasury Department." That's how it worked in 1984-'86. ...
The biggest obstacle to 1986-style tax reform is Barack Obama. In his acceptance speech, he reiterated his call for higher tax rates on high earners.
That's as much of a deal killer for Republicans as his late-in-the-day insistence on $400 billion in additional revenues in the August 2011 grand bargain negotiations, documented once again in Bob Woodward's "The Price of Politics." ... Woodward reports that during the grand bargain negotiations, congressional leaders of both parties voted Obama "off the island." Voters who want Simpson-Bowles-type tax reform can do that in November.