BAUCUS AND HATCH PLAN TO ZERO-OUT TAX CODE:
BAUCUS AND HATCH PLAN TO ZERO-OUT TAX CODE:
http://www.politico.com/morningtax/0613/morningtax11028.html
DRIVING THE DAY I: BAUCUS AND HATCH PLAN TO ZERO-OUT TAX CODE: The Senate’s chief tax-writers are preparing to release a tax reform framework today that would strip from the Tax Code its abundant number of credits and deductions to dramatically lower corporate and individual tax rates. The so-called zero plan makes lawmakers start tax reform from a clean slate — forcing members to defend their most cherished tax breaks. Kelsey Snell and your Moring Tax-er report, “Several sources said that Baucus and Hatch will send a “dear colleague” letter to other senators letting them know that they will have time through the end of July to offer feedback on which tax breaks should be retained. Such a strategy is sure to encounter opposition from members of both parties who would rather cut tax breaks they don’t like rather than defend provisions they support.” The full story: http://politi.co/14uHpfG.
If you need a briefing on how zero plans generally works, the Tax Policy Center broke it down after the Bowles-Simpson committee proposed a similar plan. In that version, the code is stripped of all expenditures, deductions and credits beyond the earned income tax credit for the working poor, the child credit, foreign tax credits and a various few others. The analysis: http://bit.ly/jxKLyR
More:
http://backintheblackblog.org/2013/07/02/the-fed-and-tax-reform/#more-1138
(snip)
Another announcement came from Chairman Max Baucus (D-MT) of the Senate Finance Committee. Chairman Baucus said that his Committee will attempt to formulate a plan for tax reform by starting with the presumption that all tax preferences – often called “tax expenditures” – will be repealed. The burden of proof will be on those who want to restore any individual preferences, and restoring each preference will carry a price tag in the form of higher tax rates. Thus, each tax preference will have to undergo an implicit cost-benefit test before the Committee. No Member who advocates a particular tax preference will have any advantage over any other Member who advocates another, on the basis that one is presumed to be retained and the other to be repealed.
Looking from 35,000 feet, the biggest winner from a major tax reform (like that which was enacted in 1986) is the interest whose tax preference is not repealed. That interest gets all of the tax relief from the rate reduction financed by the repeal of everyone else’s tax preferences, but gets to keep its own. Proceeding under Chairman Baucus’s “zero plan” – as it was called by Erskine Bowles and Alan Simpson when they recommended it in their National Commission on Fiscal Responsibility and Reform – would ensure that no interest would win that jackpot simply by being forgotten in the rush, and instead would have to state its case and win majority approval.
But is this the best way to move forward? It isn’t clear. Only time will tell.
(more at link)
:p
