House Ways and Means Committee Chairman Dave Camp (R-Mich.) announced Jan. 13 that he will hold a hearing to examine the current tax structure as the first part of efforts to begin working with the Obama administration on tax reform.
Camp said the hearing will occur Jan. 20 and public comments on tax reform will be accepted by the committee until Feb. 3.
“This hearing marks the beginning of a dialogue that the President and the Congress—both Republicans and Democrats—must have with the American people about broad-based tax reform that will allow families to thrive and employers to create jobs,” Camp said in a statement. Camp said nine out of 10 families either hire tax preparers or purchase tax software in order to file their taxes, so “it is clear that the tax code is too complex, too time-consuming and too costly for our families and businesses.”
Camp said 2011 is the 25th anniversary of the Tax Reform Act of 1986, which cut tax rates for individuals and businesses and broadened the tax base by closing loopholes and eliminating tax expenditures. Lawmakers on both sides of the aisle have agreed in recent months that those should be the goals of a new round of tax reform, though many politicians and analysts are skeptical that tax reform can be accomplished ahead of the 2012 election.
Since 1986, marginal tax rates have gradually risen and new tax preferences have been added back into the tax code, adding complexity to the tax system and increasing administrative burdens on both taxpayers and the Internal Revenue Service, Camp said.
“The costs, both in terms of money and time, of complying with Federal tax laws—in addition to the vast resources poured into sophisticated tax planning and tax-motivated transactions—deprive both households and businesses of capital needed for more productive uses,” the committee's hearing announcement stated. “Ensuring long-term prosperity in the face of increasing global competition and acute fiscal pressures requires the Congress to re-examine the tax code to determine the specific ways in which the current structure of the Federal income tax discourages job creation and economic growth.”
Treasury Secretary Timothy Geithner Jan. 12 said the administration is trying to assess whether there is enough political support to get any meaningful corporate tax reforms accomplished in the coming year.
Like Camp, he said it is clear that the tax code is overly complex and suggested the White House could support a broadening of the tax base and lower corporate tax rates to make the United States more competitive with other countries' tax regimes. However, Camp has scheduled a Ways and Means Committee organizational meeting for Jan. 18.
The complete text of this article can be found in the BNA Daily Tax Report, January 14, 2011. For comprehensive coverage of taxation, pension, budget, and accounting issues, sign up for a free trial or subscribe to the BNA Daily Tax Report today.