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On June 11, Sen. Max Baucus (D-Mont.) addressed a crowd at the Bipartisan Policy Center underscoring the need for tax reform. As the Chairman of the Senate Finance Committee, Baucus holds a key position as one of the Senate’s key tax writers.
Baucus called for innovative ideas and a commitment to working across the aisle on such an important issue given the fiscal cliff facing the U.S. While the tone set by Baucus—and that previously outlined of his House counterpart, Rep. Dave Camp (R-Mich.) Chairman of the House Ways and Means Committee—is a laudable one of broad reform, Baucus failed to go into much detail on his proposal. Rather, he outlined four key goals for tax reform: 1) create jobs, 2) increase U.S. competitiveness in the global economy, 3) foster innovation and 4) promote opportunity. He also indicated that the ongoing conversations on the issue often center on the deficit-reduction plans offered by The Moment of Truth Report of the President’s National Commission on Fiscal Responsibility and Reform, also commonly referred to as the Simpson-Bowles plan.
The ever-present challenge with tax reform is the growing deficit and ideological difference between Democrats and Republicans over whether or not revenue raisers will make the final cut in any proposal. Many top Democrats have said that revenue raisers have to be part of any efforts to reduce the deficit, while Republicans have expressed a desire to have tax reform revenue-neutral.
In addition to the looming sequestration approved under the debt ceiling agreement which would reduce overall federal spending by about 2.7 percent starting in 2013, lawmakers also must address a handful of tax provisions set to expire at the end of 2012, including 2001 and 2003 reduced income tax rates.
The Congressional Budget Office (CBO) has pointed to these various issues as a “fiscal cliff” the U.S. is facing which, if not properly dealt with, could have disastrous effects.
In light of 2012 elections, Baucus urged Congressional leadership to avoid forcing votes on any fiscal-cliff measures in order to prevent further damaging lawmakers’ relationships with one another and causing opinions to harden before the lame-duck session when it is expected most of these issues will be addressed. Those comments notwithstanding, both House and Senate leadership have indicated they may hold votes on extending the current tax rates prior to the August recess.
Looking forward, Baucus outlined plans to begin holding members-only meetings as early as next week on the tax extenders and hearings to explore various fiscal proposals, namely the Simpson-Bowles and Bipartisan Policy Center’s Rivlin-Domenici proposals which take a two-pronged approach to deficit reduction: revenue raisers and spending restraint.
Baucus underscored his remarks calling on lawmakers to work together: “Nothing of consequence is ever accomplished by doing something alone. You have to work with people.”
Deficit reduction and broad tax reform are two top priorities for NSBA. Such reforms should broaden the base, lower all individual and corporate tax rates, make business taxes more globally competitive for U.S. business, and greatly simplify the current code. One such option would be enactment of the Fair Tax, a national, 23 percent sales tax to replace the current tax code. Combined with this, NSBA believes that the government must get control over its most costly entitlement programs.
Please click here for more on NSBA’s proposals.
Please click here for more on Baucus’ address.