Where’s the comprehensive tax reform we’ve been hearing about for the past few years? 2010’s Simpson-Bowles plan, although it had fairly widespread bi-partisan support, resulted in no actual legislation; Republican Dave Camp released a widely-cited road map in early 2014, which has not been taken up in any meaningful way; Oregon’s own Senator Wyden, now the highest-ranking Democrat on the Senate Finance Committee, has been putting forward variations on a bi-partisan tax reform plan since 2010; in January 2015, President Obama put forward the White House’s template for tax reform.
Since January, five Senate Finance Committee working groups have been seeking input and developing proposals for potential tax overhaul legislation; however, they just received an extension of time to report back, so we’ll be waiting at least another month to see what they came up with. Meanwhile expect to start seeing the tax policy statements of presidential candidates: Marco Rubio (R, Florida), has already released his in the form of proposed legislation, which has been both praised and criticized by conservatives. Other Republican candidates such as Ted Cruz and Rand Paul are reported to favor a flat tax—we anticipate we’ll be hearing more about that in short order.
With presidential campaigns already underway, passing meaningful tax reform before the 2016 elections seems highly unlikely. A recent CFO Journal article summarizes the challenges, which include new committee leadership, whether the proposal should be revenue-neutral, whether it should address individual or only corporate taxes, and how to handle increasingly significant international tax issues.
Even though we’re unlikely to get tax reform now, we will definitely be exposed to plenty of conversations about it and, as can often be the case during an election season, the information we receive can quickly become confusing and overwhelming. We thought this might be a good time to provide a few resources to aid you in sifting through the news coverage and candidate statements.
Here are some places to learn more:
- US News’ “Data Mine” reported on a Pew Research poll of public opinion about tax reform, with plenty of charts and graphs for the visually inclined data gatherer.
- Forbes’ website hosts a blog for Tax Analysts, a tax news and policy source, which has been posting articles about presidential candidate’s tax policies, including this one about the limitations of a flat tax.
And if you really want to wonk out, go to the source. Most articles about tax policy cite studies from one of three places, so why not find out more about their stances and available resources directly?
- Tax Policy Center – a joint project of the Brookings Institution and the Urban Institute, usually considered centrist-liberal. For a sample, you could try this testimony to the House on the conundrum small businesses pose for tax reform. They have previously compared tax positions of presidential candidates, but haven’t put up a page for 2016 candidates yet.
- Tax Foundation – a conservative tax policy group, they have developed a model for scoring the economic impact of tax policy. They publicize Tax Freedom Day, a method of illustrating taxes paid by calculating the day in the year by which the cumulative earnings of US taxpayers has paid their total income tax bill. They will be comparing the tax reform plans of all presidential candidates, but not much information is posted yet.
- Cato Institute – their site includes commentary, case studies and articles, with robust tax content. Cato is generally considered libertarian.
We hope these resources help satisfy your curiosity about potential tax reform, and prepare you for the election season to come. If your concerns run along more practical lines, don’t hesitate to contact your Perkins & Co tax advisor for information about how potential tax reform might affect you.
Author: Susan Sterne, Shareholder
This blog post is a summary and is not intended as tax or legal advice. You should consult with your tax advisor to obtain specific advice with respect to your fact pattern.