July may be the most important month for tax reform since 1986 -- the last time the tax code was considerably altered.
A week ago, Senate Finance Committee Chairman Max Baucus (D-Montana) and ranking member Sen. Orrin Hatch (R-Utah) sent individualized Dear Colleague letters to all 98 senators requesting input on comprehensive tax reform legislation. The senators advocated for scrapping the entire tax code and rebuilding it one page at a time, defending inclusions on an individual basis.
This letter came a week after the Senate Finance Committee held a series of private meetings on tax reform, including a joint-chamber meeting led by U.S. Rep. and Ways and Means Committee Chairman Dave Camp (R-Michigan) to kick off their summer dialogue tour. The two chairmen will soon begin to traverse the country -- starting in St. Paul on July 8 -- to engage voters directly on tax reform.
"We're going to talk to people, families, consumers, business groups ... to get a better idea of what people are thinking," Baucus said at a June 17 breakfast sponsored by The Christian Science Monitor.
All told, the actions of these leaders signify that a comprehensive rewrite of the tax code is a real possibility and the top priority of some of our nation's most powerful legislators (Sen. Baucus and Rep. Camp will leave their leadership posts in 2015). Obviously, real challenges exist -- namely clear partisan differences and overwhelming hesitation among politicians to discuss eliminating or restricting popular tax breaks -- but the efforts by Rep. Camp and Sens. Baucus and Hatch are a clear step forward and may be the last chance for reforming our inefficient and outdated tax code.
As members of the aforementioned Simpson-Bowles led Campaign to Fix the Debt, we commend Chairman Baucus and Ranking Member Hatch for taking such a bold approach in putting forth the "Zero Plan" and providing valuable leadership in forcing a real discussion on tradeoffs that will advance the cause of serious tax reform and possibly broader fiscal reform. We believe that our nation's unsustainable debt is a very real problem and see tax reform -- along with replacing sequestration with larger, more gradual and sensible spending reductions -- as a necessary first step to tackling the debt.
We are equally excited that Americans can hear details first hand from Rep. Camp and Sen. Baucus.
Eliminating all tax preferences in the past allowed us to reduce the top two rates to 23 percent while setting aside a small portion of the savings for deficit reduction. Starting with a clean slate, and requiring those who wish to add back tax preferences to pay for them with rate increases, would lead politicians to subject tax expenditures to much greater scrutiny and, if desired, then to restore worthwhile tax expenditures in a more efficient and cost-effective manner.
The decision by Sens. Baucus and Hatch to use this approach makes us hopeful that Washington can enact tax reform to attain lower rates, level the playing field, improve simplicity, promote robust economic growth, and reduce the deficit.
We see this as an notable case of bipartisanship and hope that other leaders in the House and Senate will rise to the challenge and act responsibly in using the savings from eliminating the $1.3 trillion in annual "tax expenditures" to lower rates in a progressive manner, reduce the deficit, and restore those tax provisions they consider worthwhile in a more efficient, cost-effective manner.
Now is the time for D.C. to get their act together and make this type of action the new norm. Our nation's future and the lives of our children depend on it.
Former Congressman Tim Penny represented Minnesota's 1st Congressional District from 1983-1995. Former Congressman Mark Kennedy, currently the director of the George Washington University School of Political Management, represented Minnesota's 2nd Congressional District from 2001-2003 and Minnesota's 6th Congressional District from 2003-2007. Both are working with the Campaign to Fix the Debt, a bipartisan group urging enactment of a thoughtful and comprehensive plan that puts U.S. debt on a downward trajectory over the long term while protecting the most vulnerable and meeting the federal government's vital commitments.
