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Saturday, January 18, 2014

NY Times: A Window Is Opening for Change in Tax Code

Open WindowNew York Times:  Window Is Opening for Change in Tax Code, by Floyd Norris:

Could this be the year that a comprehensive tax reform law is passed by Congress and signed by President Obama?

On the face of it, the very idea sounds absurd. To call the current Congress dysfunctional would be an understatement. Simply reaching a budget compromise this week was viewed as a surprising accomplishment.

But the below-the-radar reality is that a lot of work has been taking place in the tax-writing committees, at least to some extent on a bipartisan basis. They have churned out thoughtful reports and proposals that go into real detail on several complicated issues.

Moreover, the chairman of the House Ways and Means Committee, Dave Camp of Michigan, faces a deadline. Under Republican caucus rules, he must step down as chairman at the end of this year. ...

Until recently, it appeared his Senate counterpart, Max Baucus of Montana, faced a similar deadline. He had announced plans to retire at the end of this Congress. But Senator Baucus will now leave far sooner than that. He has been nominated to be ambassador to China and will leave the Senate after he is confirmed. The new chairman of the Finance Committee will be Ron Wyden of Oregon.

That could be interesting. Few senators have shown as much eagerness to work across the aisle as he has. He has been pushing his own tax plan in concert with Senator Dan Coats, Republican of Indiana. That plan at least broadly follows the lines of any tax overhaul now possible: a reduction in stated tax rates, with the loss in revenue made up by closing loopholes and exemptions. ...

The most likely outcome this year is that no bill will be enacted. Achieving significant change would require a willingness on both sides of the aisle to stop seeking easy political gain. That happened in 1986, when the last serious tax reform law was passed, but it is hard to imagine it happening now.

Nonetheless, Senator Wyden has shown a willingness to reach across party lines in ways that have sometimes made his fellow Democrats uncomfortable. In 2011, he sponsored a Medicare proposal with Representative Paul Ryan, who became the Republican vice-presidential nominee the next year.

It is hard to believe that he and Representative Camp could reach an agreement that would gain support from both parties and both houses. But he might be willing to try.

(Hat Tip: Mike Talbert.)

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