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Sunday, March 10, 2013

Tax Reform, Then and Now

Previous posts have examined the issue of tax reform.  At The Washington Post, Jerry Markon writes:
The last time Congress set out to overhaul the tax code, aiming to lower rates and closing billions of dollars in loopholes, corporate America reacted with alarm, and a titanic struggle ensued. The final bill was nicknamed the Lobbying Relief Act of 1986.
At the time, The Washington Post described “hordes” of corporate lobbyists roaming Capitol Hill hallways as House Ways and Means Chairman Dan Rostenkowski (D-Ill.) and Senate Finance Chairman Bob Packwood (R-Ore.) hammered out the legislation.
Rep. Bill Frenzel, then a junior Republican member of the Ways and Means Committee, was flooded with 300 requests for appointments every day, compared with half a dozen a week during normal times. “It was a mess,” recalled Frenzel, now a guest scholar at the Brookings Institution. When Congress considered limiting popular deductions for mortgage interest and real estate taxes, he recounted, industry lobbyists “beat us to a pulp.”
This time around, with heightened partisanship and the growth in Washington’s influence industry, many observers expect advocacy on an even greater scale. “It will be immense,’’ Frenzel predicted.
Since 1986, Congress has stuffed the tax code with new breaks — known in Washington as tax “expenditures” — including popular benefits for taxpayers with children, college expenses and retirement savings. These provisions cost the government more than $1 trillion a year in revenue, according to congressional hearings.