Addicted to the tax code
EARLIER this year the President, the chairman, and virtually all of us on the House Ways and Means committee decided to figuratively roll down the window and throw out the current tax code with all of the special provisions that have become such an addiction for so many interests in America. But now as we get ready for a full floor vote on a tax reform bill this week, we find there's a tendency to give in to the tug of the same old tax breaks. Old habits are hard to break. The President made it seem easy. If we would eliminate the loopholes and lower the rates, he said, we would tie the economic decisions made in the private sector to the engine of market forces rather than the block and tackle of the tax code. Simple stuff! And right!
As expected, every single exception, deduction, exemption, or gimmick in the tax code has a constituency somewhere, and those groups have been marching on Washington with computer mail precision in support of their special tax break. It is probably the most aggressive and doggedly determined lobbying effort that Washington has seen in many, many years.
And there is one common thread to the lobbying. Virtually all lobbyists have pledged that they support tax reform. All they want is to keep their special break.
It's difficult to reform the tax code, but reform it we must. We really have no choice.
The plain fact is there are some real storm clouds gathering over our tax system, and if we don't do something to straighten out our tax code soon, we may find that the American people will no longer comply with the tax laws.
In short, we risk the collapse of the government's revenue base unless we act soon. Five thousand Americans now earn $1 million per year each and pay no federal income taxes. Sixty-five American corporations earned $50 billion in a three-year period and paid nothing in federal income taxes. The American people won't put up with this sort of nonsense much longer.
When the millionaire's housekeeper pays more in federal income taxes than the millionaire, or when the clerk typist pays more in federal income taxes than the corporation he or she works for, something is desperately wrong, and it's long past the time to get it changed.
So why is the tax code so hard to change if it's so fundamentally unfair?
Because a good many interests in this country have become addicted to their special provisions. The tax code has become a feedlot for the rich; a place where many upper-income Americans and many larger corporations go to prepare their financial grocery list from the arcane provisions that in many instances were written just for them.
The tax bill that the House Ways and Means Committee has put together is not perfect, but it's a good start. It closes many loopholes, puts a damper on some of the outrageous tax shelters, and it broadens the base and lowers the tax rates so that most economic decisions can be determined by the marketplace rather than the tax code. All in all, the Ways and Means Committee has done what most people predicted we couldn't do -- and I think it's good for the country.
Now the hard part. Will the President support it? Will it pass the US House? Will the Senate be able to follow the lead of the Ways and Means Committee? I hope so -- for the country's sake!
Rep. Byron L. Dorgan (D) of North Dakota is a member of the House Ways and Means Committee.