Key Senators Adopt 'Blank Slate' Approach to Tax Reform

The chairman and ranking Republican member of the Senate tax-writing committee today announced that they would take a "blank slate" approach to tax reform, assuming all tax breaks are eliminated and requiring senators to say which ones they want reinserted into the tax code.

The announcement was made in a letter from Senate Finance Committee Chairman Max Baucus (D-MT) and Sen. Orrin Hatch (R-UT). Senators will have until July 26 to make their views known.

According to a report in Politico:

The letter doesn’t say how much revenue they expect to generate and whether that revenue should help push down rates, slash the deficit or some sort of combination. They also don’t say how low they would like to cut tax rates.

These are the thorniest issues surrounding an overhaul as Democrats are generally uninterested in cutting rates — at least for individuals — and think it’s vital to use any revenue from reform to pay down the deficit. Republicans, meanwhile, are often more focused on using revenue exclusively to push rates to 25 percent.

The Finance Committee approach is vastly different from the path House Ways and Means Committee Chairman Dave Camp has outlined. The Michigan Republican has said he wants to cut individual and corporate tax rates to 25 percent on a revenue-neutral basis. He hasn’t said which tax breaks he would be willing to cut to get there.

Will the Baucus/Hatch approach help push tax reform down the field? Howard Gleckman from the Urban-Brookings Tax Policy Center is doubtful.

Baucus is in a tough spot, and any reform effort faces severe constraints in today’s political environment. But he needs to start with a plan, not a blank slate.  A chairman’s mark with a specific set of rates and limited preferences would focus the Senate’s collective mind. But this isn’t that.

The committee is also accepting comments from the public on the website.

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