June 20,2011

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Hatch on Need to Keep Tax Reform Separate from Debt Reduction Negotiations

Utah Senator Says, “Tax reform ought not to be a ruse for a backdoor tax increase”

WASHINGTON – U.S. Senator Orrin Hatch (R-Utah), Ranking Member of the Senate Finance Committee that has jurisdiction over all tax policy, today reiterated that tax reform is essential to ensuring America’s international competitiveness and that it must remain separate from the debt reduction discussions.
“Our complicated and burdensome tax system is a drag on our economy, on businesses and middle-class families, and on job creation.  It must be reformed to maintain America’s international competitiveness,” said Hatch.  “However, tax reform should be kept separate from the debt reduction negotiations.  If not, then fixing our broken tax system won’t be the goal – raising taxes will be.  That’s a wrong-headed approach since spending is causing our debt crisis – not too few taxes.  Furthermore, as one of the leading drivers of our debt, entitlements must be on the table in these negotiations or we will have solved nothing.”

In a hearing of the Joint Committee on Taxation on April 6, former House Majority Leader Dick Gephardt and former Treasury Secretary James Baker, who led the last tax reform effort in 1986 when Ronald Reagan was President, testified that tax reform should not be a part of deficit reduction efforts. 

"And I think it is important to try, if you can, to disassociate [tax reform] from the budget issue,” Gephardt said at the hearing.  Baker went on to say, “"If tax reform gets caught up in that, you won't have tax reform.”

“We need to get the ground rules straight. Both political parties have to lay their cards on the table on the definition of revenue neutrality. Most Republicans believe we ought to maintain the taxman's take where it has historically been. In other words, tax reform ought not to be a ruse for a backdoor tax increase,” continued Hatch.  “When the question of revenue neutrality has arisen, our friends on the other side have not been clear. Some say current law, which would mean the AMT becomes an ATM for the government. That current law revenue neutrality definition would also leave in place the tax hikes set to hit virtually every American income taxpayer in 18 months. The House Progressive Caucus would raise the level of taxation even higher.”

The Finance Committee has undertaken a series of hearings this Congress examining the tax code and ways to reform it.  Before the first Finance Committee hearing, Hatch explained that tax reform must be revenue neutral – meaning that the overall tax burden be maintained at its current level.