Will tax reform happen? It would seem so given that both parties and leaders in Congress and President Obama talk about it. A 4/10/13 article in the Christian Science Monitor - "Tax reform: Why a kinder, simpler tax code eludes Congress, so far," by David Grant, notes some obstacles. These include:
Are people really that concerned with complexity? Perhaps not if it means cut back or elimination of some deduction or credit the use.
Bruce Bartlett is quoted - "It's very difficult to lower rates in a revenue-neutral matter without raising taxes on people with relatively modest incomes," given the current tax code, Mr. Bartlett says. "It's not politically doable."
The difficult discussion of what will be eliminated to allow for lower rates hasn't occurred yet.
I was interviewed for the story. Mr. Grant told me he was reading Showdown at Gucci Gulch - a book about some of the behind the scenes activities that led to the Tax Reform Act of 1986. It is a great book. If you haven't read it, I highly recommend it. Many things have changed since then though. For example, leading up to TRA'86, the top individual rate was 50% and the top corporate rate was 46%. So if we think rates are high today, they are lower than in 1986! Also, there were some behind the scenes discussions on changes and there were special provisions for certain companies only identifiable if you could figure out who, for example, was engaged in a certain construction project. We won't see any of this today. And Twitter and blogs will keep people quite informed of what is being discussed.
A recent Rasmussen Report (4/11/13) indicates that 63% of voters do not think taxes should be increased. But, 28% think taxes need to be increased to address the deficit. The issue of whether tax reform includes tax increases depends on a few things including how that is defined. Revenue neutral reform means overall - in the aggregate. Some taxpayers will see their taxes go up and others will see them go down.
What do you think? Will tax reform occur by the end of 2014 (the end of the 113th Congress)? What obstacles exist?
More thoughts on tax reform
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