Tax Reform: Difficult Now or maybe 2017?

It is a very hot week in Washington. Not Southern Arizona hot, where I grew up, but hot enough for it to be the topic de jure and hot enough to make people more surly than normal. It was, however, hot enough for me to inflate my two-foot deep pool to immerse myself after work last evening.

It looks likes the country has avoided nuclear war or using the “nuclear option”, an inside the beltway term for changing the age old U.S.  Senate rules on extended debate. We can all rest easier we will not be incinerated. Silly people, playing silly games. All of them.

 So, another week in the Capital City. Hot, another probably $15 billion in new debt this week taking the country closer to the debt showdown. No budget agreement yet. The Executive Branch deciding what laws they want to enforce. Ho hum.

There is a bit of action on the tax front. The Chairman and the ranking member of the Senate Finance Committee have asked their other 98 colleagues to let them know which existing tax provisions are worth preserving and protecting. This call for support is to be transmitted by letter to the Committee by July 27^th. It is hard to describe the intense effort by lobbying groups to get some member, any member to shill for them. 

Interesting tactic. A Senator has to be put on record to justify this deduction, that credit, exemption or other favorable tax treatment. How many can a member support and what if he leaves a favored interest group off the list? What about provisions the Senator thinks are bad policy?

It would seem the first step would be to set the parameters of what are the revenue goals? What are the targeted rates? What is the tax burden for every income category?

Democrats, of course, favor higher taxes. Republicans do not want any further increases. Until that bar is set, it would seem to be a fool’s game or maybe just needlessly rearranging the furniture.

The Committee has to start somewhere. Setting the revenue goals and structure would allow them to work backwards by subtraction rather than addition. 

I think there is forward movement by the Committee and its leadership to try to bring about tax reform. However, this is a very long process, substantively complicated and full of political landmines. In case you were not paying attention, there is not much appetite for either side to work together and while the next election is 16 months away, it is right around the corner in political time. After that, Mr. Obama will be lamer than lame and Presidential politics everywhere. 

All of this makes me wonder if tax reform will not happen until 2017.