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Tax VOX

Will Obama call for tax reform in the State of the Union?

Tax reformers are pushing the president, but aren't sure it's at the top of his agenda.

By Guest blogger / January 17, 2011

President Obama speaks about tax reform in the Grand Foyer of the White House in Washington, May 4, 2009. Tax reformers are urging the president to improve the tax code now.

Charles Dharapak/AP/File

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Tax reformers are pushing President Obama to use his upcoming Jan. 25 State of the Union address to press for a rewrite of the revenue code. They admit, though, they are uncertain whether he’ll do so, or whether he’ll follow up the rhetoric with a major White House initiative.

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Unless the president takes the lead, reformers fear their efforts will go nowhere. “What this has always been about is the president,” Senator Ron Wyden (D-OR) told me the other day. “We need to get the presidential bully pulpit.” Wyden, who has sponsored his own reform plan, says he’ll reintroduce his bill this year with a new Republican cosponsor. New Hampshire Republican Judd Gregg, who had coauthored the plan, has retired.

Last week, Rich Miller and Ryan Donmoyer at Bloomberg News described the Administration’s internal struggles over whether to embrace reform. Insiders say the debate within the Obama White House over the issue remains unresolved. It is likely that Bill Daley, Obama’s new chief of staff who has close ties to the business community, will play a key role in settling the dispute.

Rhetorical support from Obama in his speech to Congress is a necessary first step in a serious reform effort, but it is just a modest beginning. Tax reform is one of those issues that sounds fabulous at 30,000 feet. After all, what could be more popular than a clarion call for tax fairness and simplicity?

Besides, as Wyden notes, no one is likely to leap to the defense of the current revenue system. As an abstraction at least, tax reform may be the only issue in America that does not have us screaming at one another over the back fence.

The trouble comes when you start to dig in the muck of the tax code. That’s when you wrestle with issues such as what to do about the immensely popular mortgage interest deduction, or whether workers should have to pay tax on the cost of their employer-sponsored health insurance. And that’s when the issue becomes highly polarizing.