Senate Finance Committee Chairman, Max Baucus, a reserved Montana Democrat, is once again finding himself in a pickle. He’s an ardent supporter of reforming the tax code, and has even gone on record to say it’s a “once in a generation opportunity.” But he’s caught between a personal desire to get something done and a Democratic party that is not demanding tax reform so much as it is tax hikes.
It needn’t be this way. Tax reform is the one issue across the country that nearly everyone, from your average Joe Six Pack up to your University-of-Chicago-trained economist, agrees on.
Our current archaic tax code is an over-complicated mess that has so often been papered-over and patched-up that it’s nearly indecipherable. The numerous loopholes, credits and deductions create a maze of incentives that often leads to anywhere but economic growth.
Most economists also agree that higher taxes also aren’t conducive to job growth. Take for instance, this list of 88 economists, who warned that the President Obama’s proposed tax hikes “will hit thousands of small businesses and cost the U.S. more than 700,000 jobs” and “will hurt the economy and must be stopped before it goes into effect.”
Reducing taxes could be an economic boon for an economy that is in dire need of a jumpstart, but is also a nonstarter for nearly every Democrat in Washington. That shouldn’t be an end to the conversation. Fortunately, Republicans like Rep. Dave Camp and Democrats like Baucus, are attempting to find common ground through a revenue-neutral rewrite of the tax code. The idea is simply to eliminate the unnecessary complexity that may suck as much as $1 trillion out of the economy each year while also eliminating some wrongheaded incentives that have wiggled their way into the code over the past several decades.
To do this, Baucus and fellow Sen. Hatch have proposed a blank slate approach that would start with a completely clean tax code and have their congressional colleagues argue for tax breaks from scratch. That makes the process a little less contention. But as if to say just how hard tax reform really is, Baucus and Hatch are promising lawmakers that any of their proposals would remain under lock and key and would not become public until 2064.
Unfortunately, Democrats are already trying to sabotage the process. Bloomberg reports:
“Majority Leader Harry Reid and third-ranking Democrat Charles Schumer of New York told reporters that a starting point for a tax-code revision should be the Senate-passed budget for fiscal 2014, which calls for $975 billion in additional tax revenue over the decade.
Any overhaul ‘has to be under the total understanding that this can’t be revenue neutral,’ Reid said. ‘It can’t be even close to neutral. It has to be a significant tax target.’”
What Reid is really saying is that it has to be a significant tax hike. And it’s easy to see why he’s demanding it. Without ever-increasing revenues to cover the sky-high costs of Medicaid, Medicare, Social Security, and now, Obamacare, the entire liberal vision of the welfare state goes bankrupt, literally.
Of course there is more than a little irony in the fact that President Obama is off touring the country discussing how to improve the economy at the same time that Senate Democrats are once again trying to raise taxes.
Nevertheless, it’s sad to see that they are ready to kill tax reform before it even starts. And with Sen. Baucus in his last term, this could be the last bipartisan effort to reform the tax code for quite some time. Then again, delaying the process until their colleague retires may be just what Harry Reid and Charles Schumer want. How sad that they are willing to undermine the “once in a generation opportunity” being pushed by their fellow Democrat just to keep their failed liberal vision alive for a little while longer. Cynicism knows no bounds in our nation’s capital.