US Sen. Max Baucus hashed out ideas for federal tax reform Wednesday with a council of Montanans representing a number of different industries. The Democratic leader of the powerful Senate Finance Committee is making broad tax overhaul a major priority before leaving office in 2014.
The federal tax code has not been overhauled since 1986. Baucus said about 15,000 changes have been made to the code since that time, making it overly-complex and causing the US to lose some of its competitive edge in a global marketplace.
“It’s caused a disproportionate burden on small business,” Baucus said.
He assembled his Montana Tax Council in March to help develop guiding principles for eventual tax reform legislation. The group includes leaders spanning from education to utilities and business to agriculture and unions.
Members drafted a list of top principles they would like to see in the tax code after reform:
· Lower Tax Rates and Cut the Deficit
· Create Jobs and Promote the Economy
Baucus said he wants to begin any tax overhaul with a clean slate, then have individual discussions of the types of tax deductions and benefits that should be added back in. The council gave Baucus a list of their top-5 benefits to keep:
· Tax Benefits for Low-Income Workers and Children
· Expensing for Small Business
· Education Incentives
· Retirement Security Incentives
· Innovation Incentives
Group members did not present a united front on all topics. There is disagreement on whether or not tax reform should be ‘revenue-neutral’. Baucus’s office said the Senator has from the start felt additional revenue needs to be a part of the effort—in order to lower tax rates and reduce the federal deficit.
Baucus told the group the hardest part about this reform will be convincing the different stakeholders that everyone needs to give up something to clean up the code. He hopes everyone will be able to ‘take the leap’ together.
“Something's gotta be done about this,” Baucus said. “And that means by definition we've all got to hold hands to a great degree."
He expects a fair amount of political opposition to a tax overhaul. But, Baucus believes the country is heading toward a tipping point, and that will affect lawmakers.
"Where there's a sense of inevitability, that is, oh my gosh there's going to be reform and I want to be on the train, I want to be a part of this," he said.
Baucus said he would like to release a tax reform proposal by this fall.