Tax reform
I'm wading into Bruce's and Pete's territory here: Because of the failure of the anything-but-super committee to come up with a plan that included it, I don't see how "tax reform" can be enacted and start to be implemented until 2014 at the earliest.
And even that may be overly optimistic.
That's not to say that some tax changes won't be discussed and enacted before then. Contrary to what many are saying, I actually expect some changes to be adopted by the end of this year, that is, within the next four weeks. For example, one way or another an extension of the payroll tax cut seems particularly likely to happen before Congress leaves for Christmas.
But however important they might be, changes like that are tinker toys compared to the comprehensive tax reform that is now very much on the wish list of many corporations, individuals, lobbyists, associations, academics, and pundits. You know the one: the plan that would lower the overall tax rate while eliminating many of the existing deductions and credits in the code.
There's a reason that certain large U.S. corporations never seem to pay much tax. They've got an army of very sophisticated and expert tax attorneys, tax economists, accountants, and lobbyists who mark every foot of ground gained or lost in battles on Capitol Hill, at the IRS, and at the Tax Court. Our Founding Fathers had it right that an informed public was the best antidote to bad government. James Madison said, "...a people who mean to be their own Governors, must arm themselves with the power knowledge gives." In that vein, I heartily recommend Marty Sullivan's new book, Corporate Tax Reform: Taxing Profits in the 21st Century. Marty is a tax economist, who served at the Treasury Department and the Joint Committee on Taxation, where he became a good friend, and who, for the past 15 years, has written over 500 avidly read columns for Tax Notes. You won't find any easier to read or more revealing book on corporate tax reform than this one, and it's only 178 pages.
This morning, House Speaker John Boehner (R-OH) was asked by a reporter:
QUESTION:
BOEHNER:
The details of how we get there, frankly I think has yet to be worked out.
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Governor Rick Perry (R-TX) proposed his tax reform plan today and wrote this Wall Street Journal op-ed. Unfortunately, it's just a slapdash of slogans. If this plan were enacted as proposed, it would lose a lot of revenue, reward the rich, and complicate filing for most taxpayers.
Giving taxpayers the option would also mean that only those who pay less would opt in, guaranteeing significant revenue loss.
Pulling a post card out of your pocket is easy to do, but deciding whether to exercise your option to use that post card or to file under present law would add another layer of complication to April 15, just as we found with the Alternative Minimum Tax and the myriad of IRA filing options
House Ways and Means Chair Dave Camp (R-MI) will announce a territorial international corporate tax reform plan soon, probably this coming week. House Republicans are very intent on moving ahead with tax reform, and Camp's plan will be a good start. Months ago, President Obama formulated his own tax reform plan, but he won't unveil it because it might further impair his chances of getting reelected next year. Most businesses would prefer Mr. Camp's plan to Mr. Obama's, and here's why.
