36.4 F
Fort Worth
Thursday, December 3, 2020
Opinion Hamilton: Best hope for reforming tax code: Talk it to death?

Hamilton: Best hope for reforming tax code: Talk it to death?

Other News

Commentary: TCC Chancellor Eugene Giovannini: Maintaining Our Mission

Since our inception, one of Tarrant County College’s hallmarks has been our unwavering commitment to serving our community. As we all work to navigate...

Commentary: M. Ray Perryman: The Fed is taking largely unseen but essential action

The inevitable and unavoidable result of the extraordinary measures taken to curb the tragic health effects of the coronavirus has been a strong shock...

Commentary: Rising to the Challenge: Coronavirus Spurs Sacrifice and Generosity in Time of Need

These are difficult days. We’re frightened by the havoc COVID-19 may wreak on our families, friends, local businesses and the simple pleasures of life...

Analysis: Notes from a coronavirus hot spot

NEW ORLEANS (AP) — New Orleans is right outside my door. But I can't go out. Not much, anyway. My wife and I are...
Robert Francis
Robert is a Fort Worth native and longtime editor of the Fort Worth Business Press. He is a former president of the local Society of Professional Journalists and was a freelancer for a variety of newspapers, weeklies and magazines, including American Way, BrandWeek and InformatonWeek. A graduate of TCU, Robert has held a variety of writing and editing positions at publications such as the Grand Prairie Daily News and InfoWorld. He is also a musician and playwright.

Lee Hamilton 

 

As Congress moves forward on budget negotiations, the word out of Washington is to expect nothing major: no grand bargain, just more stopgap, short-term fixes. Yet there’s one ray of hope. The House and Senate chairs of the tax-writing committees, one a Republican, the other a Democrat, are preparing a comprehensive tax reform plan. They see the budget negotiations as their opportunity to enact much-needed changes to our bloated, off-kilter tax laws. The last time lawmakers managed to find a way to simplify and reshape the tax code was almost three decades ago, in 1986, when Ronald Reagan was still president. Since then there have been over 15,000 adjustments and amendments, leaving a mess that just about everyone agrees must be cleaned up. Odds are against Congress managing the task, but its handling of the debate on tax reform tells us a lot about how members approach difficult issues.

That’s because this latest effort to rewrite the tax code is saddled by a deep-seated problem that spans both parties and all ideologies: political timidity. Tax avoidance is a highly sophisticated and lucrative business in this country, and politicians address it at their peril. This became clear during the summer, when the senators leading the tax-reform charge on their side of Capitol Hill, Democrat Max Baucus of Montana and Republican Orrin Hatch of Utah, laid out their initiative. They wanted senators to take a “blank slate” approach to the issue: no current deduction, exemption or credit would continue unless a strong case could be made for it. Then they invited their colleagues to identify what they’d keep and what they’d reject.

That was a fine start, until Baucus and Hatch took an extraordinary step. They guaranteed senators 50 years of anonymity for their suggestions, thus allowing each senator to continue attacking the tax code mess without taking any specific public positions on how to improve it. In other words, here’s a public issue of enormous consequence, affecting every taxpayer in the land, and they were afraid to talk about it meaningfully in public. Sure, you hear plenty from politicians about tax reform, but it’s all generalities. They talk about a simpler code or a fairer code or a flatter code, but in truth, almost every member of Congress talks in gross generalities about the monstrosity that is the tax code and comes out fervently for reform, without actually taking a stand on the tough issues. Tax reform is meaningless without specifics. Continuing to exclude employer contributions for health care, for instance, will cost taxpayers some $760 billion over the next five years, according to Congress’ Joint Committee on Taxation – but getting rid of it will surely anger employers and employees. We could recoup $379 billion over the next five years by cutting the mortgage interest deduction, but how many homeowners do you know who would go along with the idea?

The political power of the interests that benefit from reduced tax rates on dividends and long-term capital gains, which will cost the Treasury $616 billion between now and 2017, is immense. So, in its own way, is that of supporters of the deduction for charitable contributions ($239 billion). In all, tax breaks cost the Treasury some $1.1 trillion a year – which puts them well ahead of most other forms of federal spending. Yet each has its own constituency, often a vocal, well-funded, well-organized one. Politicians who call for “tax reform” without going into specifics butter their bread on both sides – they ride the public outcry against the tax code in general, while avoiding the outcry from people hurt by the changes that tax reform would inevitably bring. After all, a “loophole” to one group is usually a “lifeline” to another. So nothing happens.

Everyone knows that tax reform will involve limiting tax breaks. It should be possible to avoid the political difficulties by capping the total without eliminating specific breaks. But even this will require political backbone. Until Congress shows us that its members possess the courage to detail publicly what’s needed, talk of tax reform will be just that: talk.

Lee Hamilton is director of the Center on Congress at Indiana University. He represented Indiana’s 9th Congressional District as a Democratic member of the U.S. House of Representatives for 34 years.  


close






Oh hi there 👋 It’s nice to meet you.

Sign up to receive awesome content in your inbox.

We don’t spam! Read our privacy policy for more info.


close






Oh hi there 👋
It’s nice to meet you.

Sign up to receive awesome content in your inbox.

We don’t spam! Read our privacy policy for more info.

Latest News

🔒 Bill Thompson: Trump is going, going, gone … but the haters can’t let go

Still nibbling leftovers from Thanksgiving dinner? That holiday turkey is getting a little gamey, isn’t it? Well, don’t feel bad. The mainstream news media are...

🔒 Robert Francis: The straight-shooting Miss TCU

Not sure when I first met Susan Nix. When I first started at the Fort Worth Business Press, she was one of those people...

Q&A with Jaime Cobb/James L. West Center Vice President of Caregiver & Community Education

FWBP: Now that visiting restrictions are changing in long-term care, what do family members need to know? Jaime Cobb: Long-term care is still learning what...

Commentary: When to donate rewards to charity and when to give cash

By ERIN HURD of NerdWalletIf you're looking to give to charity this holiday season but don't want to dip into your bank account, donating...

Commentary: Area mayors say ‘Spread cheer this holiday season, not COVID-19’

Mayors of several cities in Tarrant County released the following message: As we enter the holiday season, it’s becoming all too apparent that this year...