MY VIEW: Erskine Bowles and Alan Simpson "Blank Slate" Key to Tax Reform
Today, Fiscal Commission co-chairs and CRFB board members Erskine Bowles and Alan Simpson published an op-ed in Politico reiterating their support for the Senate Finance Committee's "blank slate" proposal for tax reform. As we have explained before, the "blank slate" approach would start by removing all specific tax preferences from the tax code and require lawmakers to justify adding them back on a case-by-case basis.
In their op-ed, Bowles and Simpson praise Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) for introducing the blank slate, a similar approach to the "zero plan" for tax reform that was the framework included in the Fiscal Commission proposal.
Starting from scratch, as Sens. Baucus and Hatch propose, provides the single best chance to accomplish fundamental tax reform, which could be one of the best ways to get the economy moving. On the Fiscal Commission (known colloquially as Simpson-Bowles), our decision to take a similar approach — we called it the “zero plan” — was a turning point that truly broke the partisan logjam. This was a true game changer that made it possible for us to put forward tax reform that accomplished the Republican goal of substantially reducing rates and the Democratic goal of raising new revenue.
Bowles and Simpson note that many popular tax preferences could be added back in the blank slate process, but lawmakers would have to prove that these provisions were cost-effective and achieved desirable public policy objectives.
Importantly, starting from scratch doesn’t mean that all tax preferences will be eliminated. Instead, it puts the onus on advocates of tax preferences to justify their existence and it requires policymakers to pay for those add-backs with higher rates. We believe most will not pass the cost-benefit analysis and will either be eliminated or phased out. Those deemed to serve important public policy purposes can be added back more efficiently and cost-effectively — for example, by using credits instead of deductions.
While the recent progress on tax reform is encouraging, Bowles and Simpson caution that overhauling the tax code is not sufficient; rather, it must be part of a comprehensive plan our nation's fiscal house in order. But the blank slate tax reform process -- if lawmakers embrace it -- can serve as an important starting point for a broader deficit reduction compromise that will make our government more efficient and effective:
Of course, tax reform can’t do all the work on its own. Any successful effort to truly unlock the U.S. economy’s potential must bring our rapidly expanding national debt under control, which means slowing the growth of our unsustainable entitlement programs to match revenues from tax reform, along with other cuts in spending. Combining tax reform with a broader package, one that also replaces the mindless sequester cuts with larger and smarter spending cuts and entitlement reforms, would represent a tremendous accomplishment.
Combining tax reform with a broader package, one that also replaces the mindless sequester cuts with larger and smarter spending cuts and entitlement reforms, would represent a tremendous accomplishment.
Starting with a blank slate doesn’t allow us to avoid the hard choices. But it does make them just a little bit easier. It lets us build the Tax Code we want, rather than chip away from the Tax Code we have. If members of Congress and the administration rise to the challenge, this country’s future will be a whole lot brighter.
Click here to read the entire op-ed.
"My Views" are works published by members of the Committee for a Responsible Federal Budget, but they do not necessarily reflect the views of all members of the committee.