After working on bipartisan tax reform for the past three years, the Senate Finance Committee’s leaders have said they want to start with a blank slate.
Chairman Max Baucus and the committee’s ranking member, Sen. Orrin Hatch, sent a letter to their fellow lawmakers Thursday asking for their input by July 26 on how to reform the tax code, as they’re “now entering the home stretch.”
Baucus, D-Mont., and Hatch, R-Utah, told their colleagues “now it is your turn” to give your ideas and “partnership to get tax reform over the finish line.” Both said they want to complete reforming the tax code in this Congress.
To ensure “that we end up with a simpler, more efficient and fairer tax code, we believe it is important to start with a ‘blank slate’—that is, a tax code without all of the special provisions in the form of exclusions, deductions and credits and other preferences that some refer to as ‘tax expenditures,’” the two write. “This blank slate is not, of course, the end product, nor the end of the discussion.”
The senators went on to say that “some of the special provisions serve important objectives.” Indeed, they said, “some existing tax expenditures should be preserved in some form. But the tax code is also littered with preferences for special interests.”
To clear out all the unproductive provisions and simplify in tax reform, Baucus and Hatch said they “plan to operate from an assumption that all special provisions are out unless there is clear evidence that they: help grow the economy, make the tax code fairer, or effectively promote other important policy objectives.”
Hatch and Baucus asked that lawmakers submit legislative language or detailed proposals for what tax expenditures meet the above mentioned tests and should be included in a reformed tax code, “as well as other provisions that should be added, repealed or reformed as part of tax reform” by July 26. “We will give special attention to proposals that are bipartisan,” they said.
The two senators explained in their letter that the “blank slate approach would allow significant deficit reduction or rate reduction, while maintaining the current level of progressivity.” The amount of rate reduction “would of course depend on how much revenue was reserved for deficit reduction, if any, and from which income groups,” they said.