FILE - In this Dec. 10, 2012 file photo, fog obscures the Capitol dome on Capitol Hill in Washington. ((AP Photo/J. Scott Applewhite))
Congressman Paul Ryan recently said that Congress must “make meaningful strides on tax reform by the end of the summer in order to stand a chance of achieving consequential changes to the tax code in the near future.” There’s no more significant legislative leader in Washington when it comes to tax reform than Ryan, the newly-appointed Chairman of the tax-writing House Ways and Means Committee, and he’s clearly serious about tackling the inequities and inefficiencies of our current tax code.
What Congressman Ryan should champion as the first step in the tax reform process is to sunset the current tax code at a specific date, far enough into the future to avoid roiling the financial markets with uncertainty, yet soon enough to force serious action.
He may, however, be overlooking the single most effective way to get the ball rolling on real tax reform. It needs to begin from a blank slate, not from the absurdly complicated current code – a piece of labyrinthine legislation that is 2,652 pages long in the shortest form published by the Government Printing Office, and 73,954 pages long in the version published by the Commerce Clearing House, which is what most tax practitioners use.
What Congressman Ryan should champion as the first step in the tax reform process is to sunset the current tax code at a specific date, far enough into the future to avoid roiling the financial markets with uncertainty, yet soon enough to force serious action.
Any attempt at tax reform that begins from that point will almost never get off the ground, and certainly not by this summer. What Congressman Ryan should champion as the first step in the tax reform process is to sunset the current tax code at a specific date, far enough into the future to avoid roiling the financial markets with uncertainty, yet soon enough to force serious action.
No other path to tax reform can unite, even if only temporarily, those who prefer some kind flat tax on income with those who prefer a tax on consumption. At least one private poll suggests that sunsetting the current tax code may be supported as many as 80% of voters.
As former House Speaker Newt Gingrich once said, “Find 75 or 80% [popularity] issues. Stand next to them and smile. Let your opponent frown!” Seventy-five or 80% issues are rare, but they have the potential to upset the usual political calculus.
For instance, conventional political wisdom holds that sunsetting the tax code would be widely supported by Republicans but not Democrats, and that a bill to sunset the code would probably fail in the Senate if it passed in the House, as it likely would. A “Tax Code Termination Act” passed the House twice before, in 1998 and 2000, and in the last Congress, a version introduced by Virginia Congressman Bob Goodlatte garnered 122 co-sponsors, including 2 Democrats, but never made it to the House floor for a vote.
If it were promoted so that it became a major issue with the public, isn’t it at least plausible that it could win the support of seven Democratic Senators? If it passed the Senate, President Obama would be faced with an interesting veto decision: would he really want to veto the will of the American people – especially when there was no real downside to signing the bill, since the effective sunset date would be well after he left office?
Congressman Ryan is to be commended for his optimism in trying to accomplish meaningful tax reform by this summer, but most seasoned Washington observers believe it will take far longer. Assuming that may be the case, a tax reform effort begun by Ryan in March or April that must be abandoned by the end of the summer will be regarded as a failure, while congressional passage of a bill to sunset the tax code would be regarded as having at least accomplished the first step in the process, even if it dies in the Senate or if the president vetoes it.
It would also tee up tax reform as a major issue for debate during the 2016 presidential, senatorial and congressional campaigns.
It’s time for those who prefer the flat tax to unite with those who prefer the Fair Tax and then bring on board those who are just plain angry at the IRS, expressed in the simple bumper sticker slogan “Abolish the IRS.” Together they should support sunsetting the tax code as the first and probably only practical way to set the stage for a national debate on a fairer, simpler and more growth-oriented system of taxation.
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