As Senator Finance Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-MI) continue to work through tax reform using their "blank slate" approach, their Senate colleagues have 11 days left to submit “add-backs.” As we’ve written before, many tax preferences are expensive, regressive, economically distorting, and do not pass the cost-benefit analysis.
The recent announcement from Senators Baucus and Hatch to pursue tax reform via a "blank slate" approach is incredibly encouraging. As CRFB Board Member Gene Steuerle has argued, it could be revolutionary. Starting by eliminating all tax preferences and requiring policymakers to justify and pay for any add-backs may represent the best chance for reducing tax rates, broadening the tax base, promoting economic growth, and reducing the deficit.
As we begin to enter the dog days of summer, the weather is not the only thing that is heating up. The tax reform debate is beginning to escalate also as Senate Finance Committee Chairman Max Baucus (D-MT) and House Ways and Means Committee Chairman Dave Camp (R-MI) begin their tour of the U.S. to drum up support for reforming the tax system.
Yesterday, Senator Max Baucus (D-MT) and Representative Dave Camp (R-MI) kicked off their summer tour of the country in order to bring the tax reform debate to the American public. The tour started in St. Paul, Minnesota, and two former Minnesota Congressmen are excited that tax reform could be a real possibility.
The lead up to July 4th brought an exciting development in fiscal policy discussions: a commitment from Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) to use a "Blank Slate" approach in tax reform.
As the tax reform debate begins to heat up again, a new report released by the General Accountability Office (GAO) contributes some telling information regarding our outdated and inefficient corporate tax code. For tax year 2010, profitable corporations that filed a Schedule M-3 (those that have assets greater than $10 million) paid 12.6 percent of their reported worldwide income in U.S. federal income taxes.
In 2010 and 2011, the federal government "spent" nearly $50 billion in revenue on energy tax expenditures. But are these provisions actually achieving their stated goals? A new government report says no.
Among developed countries the US is unique in taxes in a number of different ways. One claim to fame is the fact that the U.S. now has the highest marginal corporate tax rate. The current marginal rate in the U.S. remains at 35 percent while the average marginal rate of the OECD countries, excluding the U.S., is a full 12 percentage points lower at 23 percent. At the same time, the revenue collected by the corporate tax is low by international standards due to the number of corporate tax provisions which make the effective rate not nearly as high.
According to press reports today, Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) are about to take a very encouraging step on tax reform this morning, releasing a letter to their colleagues to inform them that the Committee will follow the Fiscal Commission's "Zero Plan" approach to tax reform this year.
The United States has the highest statutory corporate tax rate in the developed world, but substantial revenues are forgone through a variety of tax loopholes and provisions. Responsible corporate tax reform could lower statutory rates while simplifying the tax code and eliminating these loopholes.