In today's Financial Times, former chair of the Council of Economic Advisors durign President Clinton's Administration and CRFB board member Laura Tyson writes that tax reform represents a deficit reduction opportunity that both parties can agree on.
Reports today about the Republican Party's platform committee yields some good news and bad news for tax reform. First, the good news. The Wall Street Journal reports that the platform committee rejected an amendment that would call for no changes to be made to the mortgage interest deduction.
Not surprisingly, the policy world has been less than kind to a proposal to exempt Olympic winnings from taxation. After the proposal gained the support the chair of the Ways and Means Committee Dave Camp (R-MI) and President Obama, we satirically speculated the possible reasoning behind the exemption, namely to push those fourth place finishers onto the medal stand with some tax motivation.
As Congress heads toward another partisan showdown over the fiscal cliff, it is important to remember that there are plans that have received bipartisan support from current and former members of Congress and experts from both political parties. Just check out CRFB's comparison grid of fiscal plans. The plan put forward by Al Simpson and Erskine Bowles, for instance, was supported by a bipartisan supermajority of 11 out of the 18 Commission members, including four current and two former members of Congress, divided evenly between the parties.
The Senate Finance Committee will hold a mark-up of the Family and Business Tax Cut Certainty Act tomorrow at 10 am. The Act would retroactively extend the Alternative Minimum Tax patch and many temporary "tax extenders" through 2012 and extend just the extenders through 2013.
Often when tax reform is discussed these days, policymakers are gleeful to detail the ways in which they will cut tax rates or otherwise lower tax burdens under the current system, but much less forthcoming about how they will otherwise raise taxes to meet a certain revenue target (see here, for example).
The Urban Institute has a new report on the charitable deduction (co-authored by CRFB board member Eugene Steuerle) that details some options for reforming it. The charitable deduction, which has existed since 1917, is one of the largest tax expenditures in the code. The Joint Committee on Taxation estimates that from 2011 to 2015, it will result in about $245 billion of foregone revenue.
A POLITICO article reports on an effort underway at the Senate Finance Committee to negotiate an extension of the "tax extenders," narrow temporary tax provisions that are routinely extended. The article states that an agreement on an extension "could send a signal to financial markets that the two parties can find some common ground ahead of the looming fiscal cliff facing Washington at year’s end." Here's POLITICO's description of what happened:
The Tax Policy Center has released a new table showing the revenue impact of options to reform the mortgage interest deduction. The options shown all involve some form of converting the deduction into a credit.
It is encouraging to see the House Ways and Means Subcommittee on Select Revenue Measures hold a series of hearings on the many temporary tax preferences known as the "tax extenders." Far too often Congress intentionally waits until the eleventh hour so that they can extend them as a wholesale package without any review of the policies involved.