2011 predictions: No tax reform in 2011 (or 2012)
2011 predictions from TaxVox are here: Substantial tax reform is still at least a year – and probably more – away.
Much as I hate to write these words, tax reform isn’t going to happen in the coming year, or even in the year after that.Skip to next paragraph
Howard Gleckman is a resident fellow at The Urban-Brookings Tax Policy Center, the author of Caring for Our Parents, and former senior correspondent in the Washington bureau of Business Week. (http://taxvox.taxpolicycenter.org)
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The bipartisan tax deal reached by President Obama and Congress earlier this month, along with a few kind words about closing tax loopholes from a handful of GOP lawmakers, has some reformers uncharacteristically optimistic about a quick agreement to revise the revenue code. But, sadly, they are wrong. Here’s why there won’t be a serious effort to rewrite the tax code until after the next elections.
Obama isn’t on board. The President could have used the tax reform plans offered by his own fiscal commission or the Bipartisan Policy Center as an opportunity to jumpstart the debate. But he was decidedly cool, calling only for a national conversation on taxes. As Ronald Reagan showed with the 1986 Tax Reform Act, a major rewrite of the revenue code requires a full-court press by the White House. To get a bill moving, Obama would have to send a complete reform plan to Congress and keep up the pressure for passage. There is no sign he’s ready to do that.
Hill Republicans are not on board. Incoming Ways & Means Committee Chairman Dave Camp (R-MI) says tax reform will be one of his priorities, and that’s a good thing. But speaker-to-be John Boehner (R-OH) has little interest in supporting real reform. In the Senate, Democrat Ron Wyden (D-OR) still has his rewrite, but his GOP cosponsor, Judd Gregg, has retired and Republicans are not exactly lining up to take his place. Republicans would surely back further rate reductions, but they have no interest in cutting tax subsidies—the hard part of reform. It is easy enough for a pol to embrace the concept of repealing loopholes. It isn’t so easy to actually cut the mortgage interest deduction. And does anyone seriously think the GOP would give Obama an historic victory on tax reform on the eve of a presidential election campaign?