Senate Finance Committee Chairman Max Baucus (D-Mont) on Tuesday pressed a
panel of tax experts on the issue of individual tax reform, including social
policies in the tax code and ways to improve American economic competitiveness.
In the second hearing of a series intended to prepare the Committee for comprehensive
tax reform efforts, Chairman Baucus also solicited input on how elements of
the tax code, like certain subsidies, might be consolidated to help create a
fairer, more effective and less complex system of taxation.
Baucus was particularly
interested in discussing similarities among witness proposals for reform, and
identifying associated obstacles and transition costs – the costs resulting
from a shift from the current system to a reformed, future system.
This series of hearings is part of an overall effort to move proactively toward
reform beginning in 2009 that is viable, and that Congress will pass.
“In order to make significant reforms, we need significant agreement
and I want this Committee to lead the way. I am interested in developing a pro-growth
tax structure but I also know that our income tax base has corroded,”
commented Baucus.
“I think today’s hearing helped narrow our focus,
and among the differences in witness testimony today is one commonality: the
complications created by our tax system outweigh its benefits. The time is now
for reform.”
Proposals from Committee witnesses included a move from the current income
tax structure to a consumption tax structure, which would place the tax burden
on the purchase of goods and services, as well as the adoption of a comprehensive
tax structure, which would tax all income once at a single rate within an individual
tax bracket.
Panelists also referenced the idea of consolidating certain tax
credits and incentives as an effort to simplify the system, while reducing the
tax burden on individual savings and investments to promote growth, and closing
remaining loopholes and tax shelters that contribute to the “tax gap”
of legally owed but unpaid taxes, which totals USD345 billion annually.
The Finance
Committee is reviewing all options for tax reform to determine which will work
best and have the most likely chance of passage in the coming years.
Additional hearings on tax reform are being developed in consultation with
Ranking Member Chuck Grassley (R-Iowa) and with members on both sides of the
aisle.
A 5th June hearing is scheduled on the topic of business taxation, and
then specifically on taxation of American multi-nationals at a date to be determined
in June.
Issues uncovered at the tax reform hearings will be further explored
in expert roundtables. Baucus intends to work with Committee members to plan
the roundtables and additional hearings this year.
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