By far, the hottest political topic in Washington, D.C., right now is tax reform. That is appropriate because for the first time in decades, the country’s top leaders believe they have a chance to overhaul the nation’s tax system. And the impact will be felt by every American.
There seems to be universal support for comprehensive tax reform. Past and current presidents, governors and congressional leaders of both parties have championed tax reform. However, as always, it is the details that are difficult and divisive. It will be a monumental feat for Congress and the Trump administration to agree on the specifics of tax reform.
The last time the tax code was significantly reformed was 31 years ago. Since then, thanks in part to an army of lobbyists and interest groups, the tax code has become “a byzantine system,” according to Sen. Orrin Hatch, the Senate’s top tax-writer. It is bloated, complicated and riddled with patches, fixes, exemptions, credits, loopholes and carve-outs. “. . . in many respects, our current tax system was built for the economy of 1986 and is ill-suited for the needs of today,” Hatch said.
Most people can’t prepare their tax returns, and even the Internal Revenue Service makes mistakes in interpreting tax laws.
So everyone wants tax reform. But it won’t be easy. For every patch and loophole, a well-funded interest group exists, employing a horde of lawyers and accountants, ready to fight for provisions that benefit them. Already, the “framework” for comprehensive tax reform, even with few details, has been aggressively attacked by all sides of the political spectrum.
In the coming battle, Hatch is perhaps the most important person in Washington, leading the Senate Finance Committee, which will draft and debate the tax reform legislation. Hatch has studied and drafted various aspects of tax reform over many years, so he is well-prepared for the coming debate. Hatch recently gave a speech that provided excellent context and advice for the difficult task ahead.
“We need to deliver because the cost of doing nothing – the cost of maintaining the status quo for the foreseeable future – will be too much for the American people and our economy to bear,” Hatch said. “Some have said that tax reform is a do or die moment . . . I wholeheartedly believe that.”
He expressed strong disappointment at the partisan attacks on the reform framework before the details have been developed and outlined. “To get their estimates, (the critics) filled in blanks with numbers from other proposals, added a pile of exceptionally pessimistic and biased economic assumptions, and came up with a tax plan that, for all intents and purposes, is their own.”
He promised full transparency, with opportunities for everyone to weigh in. “In the Finance Committee, we’re going to write a committee bill We’re going to have a markup, where the bill will be debated and amended in the light of day. And, thereafter, I expect we’ll have a fair and open amendment process on the floor.”
Hatch also encouraged bipartisanship. “I want to work with anyone who is willing to come to the table in good faith. I think the framework puts forward a number of general proposals that both parties can support. There is fertile ground for bipartisanship here . . .” Hatch said, “nothing is set in stone and most items are still up for negotiation.”
Pro-growth, comprehensive tax reform can give middle-class taxpayers a pay raise, grow our economy and create more American jobs. No one should jump to conclusions and attack the framework or process before details are known.
Hatch notes that there currently exists more momentum for tax reform than at any time in the past three decades. This is a once-in-a-generation opportunity and we ought to take advantage of it to benefit future generations.
A. Scott Anderson is CEO and president of Zions Bank.