September 17, 2014

Senators Weigh Tax Reform

  • The nation's fiscal future depends on the balance between the spending in the federal budget and the revenues flowing into the treasury. Tax policy...

In hearings last week, the Senate Budget Committee considered ways to put the country on a fiscally sustainable path without harming the economic recovery.

Fortunately, tax reform was a key part of the discussion. Committee Chairman Kent Conrad (D-ND) stressed that simplifying the tax code and closing loopholes would allow the government to boost revenue even as it lowered tax rates.

Conrad emphasized the need to focus on the long term, saying that, “…beginning in 2012, and through the end of the decade, at that point we need to be very, very disciplined with respect to reducing those deficits, get it down to two percent of GDP.”

Eugene Steuerle of the Urban Institute echoed the need for both a simpler tax code and a focus on long-term fiscal sustainability. Tax reform, he said, "ought to achieve something quite valuable — a simpler tax code, long-term budgetary balance, a Social Security system without long-run deficits, and so forth."

The approach that Conrad and Steuerle advocate echoes the broad tax reform recommendations of the President's fiscal commission and the Bipartisan Policy Center's Debt Reduction Task Force. Such a reform effort could enable Democrats and Republicans to find common ground.