Dec. 31, 2015
By Colin Hanna
The House Ways and Means Committee has just completed an unexpected transition in its leadership from Paul Ryan to new chairman Kevin Brady, a Republican from The Woodlands – a transition that bodes well for the prospect of serious tax reform. Brady recently released his vision for the committee, which focuses on pro-growth policies. One of those important pro-growth policies is tax reform.
Brady said, “America needs a simpler, fairer, flatter tax code that’s built for growth – the growth of our family’s paychecks, the growth of our local businesses, and the economic growth of our nation.”
Although President Obama is unlikely to sign comprehensive tax reform legislation that would truly be pro-growth, that doesn’t mean that Chairman Brady can’t begin to make progress now.
The best way to set the conditions for real tax reform in the next administration, whether Republican or Democrat, is to pass the Sunset the Tax Code legislation in the current Congress.
There are several competing tax reform proposals being floated by members of Congress and Presidential candidates, yet none has garnered majority support. As a result, tax reform remains stalled. Yet there is a way to break the logjam even before the 2016 elections, and Chairman Brady can make it happen.
The solution is Sunset the Tax Code, and the bill proposing it simply sets a deadline by which the current tax code would expire, and an earlier date by which the Congress must enact its replacement. Deadlines are action-forcing events, and recent experience has shown that without deadlines, Congress often fails to take action. This proposal has the potential to unify Republicans and Democrats alike behind a common goal that is broadly supported by the American people.
HR 27, known formally as the Tax Code Termination Act, is awaiting action by the Ways and Means Committee. Its original sponsor is House Judiciary chairman Bob Goodlatte, R-Va., and it has 95 cosponsors, including new Ways and Means chairman Brady. Those 95 co-sponsors include a wide spectrum of conservative and moderate Republicans, six committee chairs, House Conference chairwoman Cathy McMorris Rodgers, R-Wash. and House Freedom Caucus chairman Jim Jordan, R-Ohio, along with one Democrat, Collin Peterson of Minnesota. By cosponsoring this bill, they have all indicated that they are serious about tax reform.
The bill would sunset the entire tax code on December 31, 2019, which is far enough away to give the financial markets time to prepare and members time to debate the issue, but soon enough to force real legislative action in the next Congress.
Tax reform requires two steps:
1. First, sunset (or legislatively terminate) the current tax code without specifying its replacement, but requiring that it be in place by a date certain. Proponents of all the replacement schemes – flat tax, two-tier tax, FAIR Tax, VAT tax, a more progressive tax or any other new tax system – can unite around the sunset concept.
The table will then be set for the second step:
2. A robust, center-stage national debate that would captivate and fully engage the public.
Candidates have been running on tax reform for decades, but no tax code replacement proposal has received widespread support. The Washington lobbyists for special interests opposed to real tax reform will do everything they can to block it. Every obscure tax provision in the tax code was secured at great cost and effort and benefits someone, so real reform is possible only if we wipe the slate clean and start from scratch. Brady’s leadership will allow all Members of Congress who share his view that the tax code is broken and must be fixed from the ground up, not merely tweaked, to vote for Sunset the Tax Code as a way of indicating their commitment to serious tax reform while recognizing that it’s a complex process.
All can support this bill and demonstrate their seriousness to moving forward with real tax reform. If President Obama chooses to veto it, he will be directly opposing a substantial majority of voters and taxpayers. He may even decide to support it, contrary to conventional wisdom, because the hard work of drafting a replacement code will not start until he leaves office.
Either way, the time to force the action and Sunset the Tax Code is now.
Hanna is president of Let Freedom Ring USA Inc., a conservative nonprofit based in Pennsylvania.