Senators Identify Key Problems with Current Tax Code
Tuesday morning, the Senate Committee on Finance held a hearing entitled “Navigating Business Tax Reform” chaired by Senator Orrin Hatch (R-UT). Witnesses at the hearing included Thomas Barthold – Chief of Staff to the Joint Committee on Taxation, Dr. James Haines, Jr. professor of law at the University of Michigan, and Dr. Eric Toder of the Urban Institute, among others.
During the hearing, committee members acknowledge many of the current issues businesses face when dealing with the U.S. tax code. Issues like high rates on the corporate and individual side, the double taxation problem, and the high cost of complying with a confusing and outdated tax system.
Chairman Hatch and ranking member Ron Wyden (D-OR) discussed the fact that U.S. corporations are subject to the highest tax rates in the developed world, that business profits which are reinvested get taxed again, and that individuals and business owners spend over 6 billion hours annually complying with the tax code.
While a desire to pass comprehensive tax reform was apparent, some committee members called for “revenue-neutral” tax reform so that the government can continue to collect the same amount of taxes but through different means. Dr. Hines Jr. was quick to point out that business revenue-neutral tax reform will do little to lower the tax burden on American companies. Congress should couple comprehensive tax reform that expands economic growth and reduces revenue as a percentage of GDP with a reduction in federal spending.
Members of Congress have been discussing comprehensive tax reform for a long time. In fact, the Senate Finance Committee itself received five separate tax reform reports from the working groups it commissioned nearly 10 months ago. Talk is cheap. If Congress is serious about passing tax reform, it must put forth serious legislation.
Check out the Heritage Foundation’s comprehensive tax reform proposal here.