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.
Would you have embraced Simpson-Bowles?
To save the country's fiscal future? I would.
Elaine Kamarck and James Pinkerton, co-chairs of The RATE Coalition, a bipartisan group dedicated to promote tax reform, write in today's The Hill that we should look back to 1986 as an example on how to move forward on corporate tax reform.
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.
Yesterday the Senate voted on two highly polarized tax plans, with a Democratic version passing 51-48 while the Republican supported bill failing to pass 45-54. Neither were paid for—the Republican plan cost $405 billion and the Democratic plan cost $250 billion ($368 billion including excluded elements)—nor took any initiative on long-term deficit reduction.
Last week, our "Spotlight on the States" blog post highlighted structural challenges for the states, one of them being an eroding sales tax base. The inability of states to collect sales taxes on online sales, which we also have previously discussed, is one factor in that erosion (in addition to the growth of service consumption). In Quill Corp. v.
The Senate is set to vote in the coming days on dueling one-year extensions of the 2001/2003/2010 tax cuts and Alternative Minimum Tax patch, with neither likely to go anywhere for now. Nonetheless, the Tax Policy Center has provided a helpful analysis of both plans in terms of both the distribution of tax cuts and a detailed breakdown of the Joint Committee on Taxation revenue estimates.
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).