Tax Reform Kick Off in the Senate

While much of the Capitol Hill tax policy discussion has happened on the House side, this week, the Senate Finance Committee stepped to the plate with a hearing that examined the challenges and prospects of comprehensive tax reform. The Committee also considered the nomination of a key player in the process – Assistant Secretary of the Treasury for Tax Policy.

For his part, nominee David J. Kautter accurately summed up the state of our current tax code when he called it “unnecessarily complex, anti-competitive and picks winners and losers.”  He went on to lay out a new vision, testifying that “Americans need a simpler system when filing their taxes and the middle class needs a tax cut. U.S. businesses need a tax code that allows them to prosper, domestically and in the international marketplace.”

Committee members also heard from four former Assistant Secretaries for Tax Policy who served under President George W. Bush and President Barack Obama.

Jonathan Talisman noted the complexity of the tax code, calling it a “significant concern. It affects economic growth by imposing substantial costs and administrative burdens on taxpayers.  Complexity can also increase uncertainty as taxpayers struggle to ensure they are compliant in effecting their business decisions.”

In her testimony, Pamela Olson discussed how the rewards of a “well-designed system – stronger economic growth, increased attractiveness to capital investment, faster job creation, rising wages – will lead to a more broadly-shared prosperity and make the effort well worth undertaking.” As she summed it up, “The United States first must regain, but then must maintain, a tax code that promotes economic growth and improves the economic well-being of all Americans.”

Eric Solomon touched on our tax system relative to the global marketplace, telling the Committee, “As the global economy evolves, we need to reevaluate our tax laws to ensure they are responsive to current and anticipated domestic and global conditions. We must also recognize that our tax system does not operate in a vacuum – it is one of many tax systems around the world, and as other countries revise their tax systems, we must respond as necessary to ensure that our tax system is in the best possible position to facilitate outbound and inbound investment and maximize the welfare of the American people.”

Finally, Mark Mazur discussed the lessons learned from past tax reform efforts and emphasized the need for bipartisanship as he testified, “Congress has the opportunity to undertake significant reforms to the tax code. These reforms can improve the efficiency and equity of the tax system and reduce its complexity. But undertaking tax reform is hard work, and this Committee has embarked on this effort, knowing the difficulties involved. However, these are targets of opportunity where bipartisan tax reform can and should occur.”

From the complexity of our tax code, to the economic benefits of reform, to our role in a global economy to bipartisanship, each witness hit on key points of this ongoing tax reform discussion.  This won’t be an easy task, but Congress and the White House must not be deterred. To stand still is to fall behind. Taxpayers deserve better.