December 20, 2014

Time to Clean Up the Tax Code Mess

  • The nation's fiscal future depends on the balance between the spending in the federal budget and the revenues flowing into the treasury. Tax policy...

Lawmakers in both parties promised to work together to revamp the tax code as the House Ways and Means Committee last week held a hearing on the subject. Several recent panels, including the President’s fiscal commission, have suggested that tax reform could play an important role in deficit reduction.

Nina Olson, the IRS taxpayer advocate, offered a blunt assessment echoed by other witnesses at the hearing: “In my view, the tax code today is a mess.” Committee Chairman Dave Camp (R-MI) and Ranking Member Sander Levin (D-MI) both released statements emphasizing the need for substantial changes.

Eliminating tax breaks would make it possible to reduce tax rates yet bring in more revenue than in the past. Lawmakers must resist the temptation, however, to try to streamline the system without addressing the massive imbalance between federal revenue and expenditures. The fiscal situation has deteriorated past the point where we can afford the sort of “revenue neutral” tax reform that Congress approved in the 1980s.

The Concord Coalition urges the President and both parties in Congress to work together in putting a high priority on tax reform this year -- an effort that can both support the current economic recovery and promote long-term deficit reduction.