June 11, 2012
Max Baucus takes early step on tax deal
Sen. Max Baucus (D-Mont.) on Monday began to lay the groundwork for a major tax reform deal, laying out in broad strokes what a sweeping compromise would need to achieve.
Baucus, the chairman of the tax-writing Senate Finance Committee, said he was “making progress” on a detailed tax reform proposal that he vowed would get support from both Democrats and Republicans. He also called for a tax reform plan that would raise more revenue to lower the federal deficit.
“Deficits and debt are not just a spending problem,” Baucus said Monday in a speech at the Bipartisan Policy Center. “Revenues as a share of GDP over the past few years are the lowest they have been since World War II. We simply don’t raise enough revenue.”
Without delving into specifics, Baucus outlined four goals that he said comprehensive tax reform needs to accomplish: creating jobs, making the United States more competitive internationally, supporting innovation in industries such as technology and energy, and providing more opportunities through education.
“We can accomplish all this with tax reform,” Baucus said.
Noting that lawmakers have changed the Tax Code 15,000 times since the last overhaul in 1986, Baucus said the code is “growing out of control.” He added that lawmakers need to scrutinize all expiring tax provisions and root them out unless there is “clear evidence” they lead to job creation and economic growth.
“We know tax reform won’t be easy,” Baucus said. “We will need to slay some sacred cows. When favorite tax breaks disappear, someone will always be unhappy. But that’s the wrong way to look at it. The right way to look at it is to focus on results.”
On the issue of the so-called “fiscal cliff” facing lawmakers, Baucus stressed that all options are “on the table” and said Congress should avoid taking “divisive” votes before the election. Though Baucus didn’t elaborate, both Democrats and Republicans in Congress have called for votes on tax rates in the summer, and the Republican-led House has announced that it will vote likely in July on freezing all tax rates beyond 2012.
The fiscal cliff includes lower, expiring Bush-era tax rates and automatic spending cuts scheduled to hit key government programs next year. Aside from heading off that scenario, Baucus said lawmakers also need to reach a longer-term deficit-reduction deal.
Baucus said he would hold hearings to examine proposals such as Bowles-Simpson and Domenici-Rivlin as a step forward in reaching a more comprehensive debt reduction deal.
“The reality is, we’re on a dangerous path,” Baucus said. “If we don’t act, it could lead toward a fiscal crisis like some European countries.’
View article here.