This is cross-posted from the Alliance for The Defence of Canadian Sovereignty website.
Welcome to 2015. On January 5, 2014 incoming Chairman Orrin Hatch of the U.S. Senate Finance Committee said:
National Review Online OpEd: It’s Time to Rebuild the Tax Code
Seven guiding principles for comprehensive income-tax reform.
Everyone agrees that the American tax system is broken and in need of reform. It stifles job creation, innovation, and competitiveness. It’s counterproductive, confusing, and a serious drag on the economy. Simply put: Tax reform is no longer an option but an obligation.
With the start of the new Congress, Washington has an opportunity to rebuild the tax code in a way that will spur economic growth, jump-start job creation, and once again restore prosperity to the American people.
To achieve this goal, however, the White House must get in the game and start to lead. This means putting smart policy ahead of poll-tested talking points and working with Congress in good faith. It also means accepting principles established by Congress to lay the foundation for true reform.
The most important principles were those followed by President Reagan nearly 30 years ago when Congress last acted to overhaul the tax code: economic growth, fairness, and simplicity.
Tax reform should promote growth in the economy and reduce economic distortions. It must eliminate the uncompetitive nature of the code and reduce disincentives to work, entrepreneurship, savings, and investment.
Tax reform should reduce tax expenditures to broaden the tax base and simultaneously lower tax rates. A broader base coupled with significantly lower tax rates is the foundation of what would be a much fairer tax system.
We also need a simpler system. Tax reform should reduce complexities in the tax code to lower compliance burdens, increase efficiency, and free up resources for productive activities, including job creation.
While these three principles will be vital to congressional tax-reform efforts, the demands of a 21st–century global economy will require even more, most notably: permanence, competitiveness, promotion of savings and investment, and revenue neutrality.
In today’s world, permanence and competitiveness are key. The code’s lack of certainty hurts job creation, stifles planning, and inhibits economic growth. Permanence would make our code reliable and predictable for American households and businesses.
We need a tax system that no longer threatens to change from year to year, and we need a tax code that is internationally competitive. Tax reform should substantially lower the corporate tax rate and move us to a territorial tax system, with base erosion protections, to ensure that American job creators are on a level playing field with their foreign competitors.
A tax overhaul should also promote savings and investment, which provide fuel for growth. Many aspects of the current U.S. income-tax system discourage savings and investment, which ultimately hurts long-term growth.
Lastly, tax reform should embrace the principle of revenue neutrality. If we’re scouring the tax code looking for ways to squeeze more revenue to fuel government spending, we’re not reforming the tax code, we’re raising taxes. It’s as simple as that. Tax reform should not be used as an excuse to raise taxes on the American people. Any such effort is a needless distraction.
In fact, those who believe that the American people are currently undertaxed should look at historical trends. According to the Congressional Budget Office, federal revenues already exceed historical averages and will remain that way for the foreseeable future. Congress should deal with the problem of excessive federal spending, but it shouldn’t look to tax reform for even more revenue.?
These seven principles should serve as the guideposts for any and all tax-reform efforts. Any serious idea should link back and be relevant to at least one of these seven principles. The best ideas should embrace all of them.
The 114th Congress is set to begin, and I’m hopeful that a path to real bipartisan tax reform will take shape. I plan to help move the conversation forward in the coming weeks and months by engaging with members of both parties and unveiling additional steps.
True success will take more than just talk. It will take hard work, commitment, and, of course, bipartisan compromise. The challenge before us is clear.
— Orrin Hatch is the senior senator from Utah and the incoming chairman of the U.S. Senate Finance Committee.
I believe that Senator Hatch is serious. His statement on January 5, 2015 is a reinforcement of his December 16, 2014 speech in the Senate where he outlined 7 Principles For Tax Reform. His speech included:
“In the coming weeks and months, I plan to reveal additional steps. I plan to involve many of my colleagues on both sides of the aisle, particularly those who will be joining me on the Senate Finance Committee. My hope is that, as this conversation continues, a path toward real bipartisan tax reform will begin to take shape. Of course, it’ll take more than just a talk and discussion. It’ll take hard work, commitment, and, of course, compromise,”
Continue reading "Seize The Day 2" – Staff Report on Comprehensive Tax Report on 2015 and Beyond – Republican Staff U.S. Committee on Finance