Taxpayers for Common Sense sent the following letter to the U.S. House of Representatives in anticipation of its upcoming vote on the ‘Tax Cuts and Jobs Act’ bill.
Taxpayers for Common Sense urges you to vote no on the final Tax Cuts and Jobs Act.
What began as a promising effort by both parties to find a path to revenue-neutral comprehensive tax reform has become a bitterly partisan fight to steamroll a package through both chambers at any cost.
The proposal this process has produced reflects a complete failure to follow through on the difficult task of simplifying and strengthening the federal tax code. It is a missed opportunity that will create more uncertainty in the years ahead while adding in excess of $1 trillion to the federal debt in the next decade.
The country deserves a better bill. Historically, one of the fundamental points of agreement about tax reform was that it should reduce tax rates, broaden the base, and eliminate the special interest deductions and exemptions that make the tax code more complicated and less efficient.
When then-Senate Finance Chairman Baucus (D-MT) and Ranking Member (now Chairman) Hatch (R-UT) began work on a comprehensive, bipartisan tax reform proposal back in 2013 they started with a “blank slate” approach.
In a letter to their colleagues they wrote, the “tax base [is] riddled with exclusions, deductions and credits. In addition, each year, it costs individuals and businesses more than $160 billion to comply with the tax code.
The complexity, inefficiency and unfairness of the tax code are acting as a brake on our economy. We cannot afford to be complacent.” At the time, then-House Ways & Means Committee Chairman Camp (R-MI) said, “We’re not going to take the current code and see what comes out. We’re going to take a blank piece of paper and see what goes back in.”
The base broadening this process of elimination would create would offset the reduced revenue from lower tax rates across the board and would improve the performance and efficiency of the overall tax code. This was the original goal of tax reform, as Sens. Baucus and Hatch rightly chose it as the starting point for their reform proposal.
Unfortunately, this basic tenant of comprehensive reform is largely absent in the package Congress will vote on. The package now before Congress makes only a halfhearted attempt to strip out the ineffective and redundant tax expenditures that effectively pick winners and losers across and within industries.
In September 2016, Taxpayers for Common Sense held a panel conversation with individuals central to the passage of the Tax Reform Act of 1986. To a person, the participants stipulated that the only path to major tax reform involves hard work by members of Congress willing to immerse themselves in substance and open their ears to the concerns of their colleagues on the other side of the aisle. The experience of tax reform from thirty years ago was and still is a good example of how a good faith effort to create a bipartisan package can produce lasting improvement. Here too, what began as a bipartisan process was derailed by the decision to pass sweeping changes to the tax code through the budget reconciliation process to avoid negotiating with the other party.
As recently as this summer, Senate Majority Leader McConnell (R-KY) said tax reform would have to be “revenue neutral.” The tax reform package is not revenue neutral, as members of both parties originally supported. The Joint Committee on Taxation estimated that even after taking into account economic growth the proposal will add more than $1 trillion to the national debt. No credible outside analysis finds that this bill will pay for itself. It has been disheartening to see members of Congress, the Administration, and other advocacy groups that once supported fiscal responsibility to wholeheartedly support a proposal that will add more the national debt than the American Recovery and Reinvestment Act of 2009, the so-called stimulus package and completely wipe out any savings from the Budget Control Act of 2011.
Furthermore, in the Senate bill (and presumably in the final package) every single individual tax provision expired before the end of the ten-year window. This gimmick is designed to mask the true cost of the bill and ease passage in the Senate. Both bills included narrow tax provisions that will continue the wasteful practice of tax extenders. This is the opposite of true tax reform.
It has been 30 years since Congress overhauled the tax code. One of the principal goals of this reform effort had been to reevaluate all of the policies that have made the federal tax code an additional spending program for the well-connected. At some point in the process Congress lost the plot, and it means taxpayers, specifically lower wage earners subsidizing the better off, will be funding these wasteful and costly policies for another three decades.
Taxpayers for Common Sense urges you to Vote No on the Tax Cuts and Jobs Act. Taxpayers cannot afford more than a $1 trillion in new debt.
President, Taxpayers for Common Sense