Keith Hennessey on Tax Reform

http://www.futureofcapitalism.com/2013/01/keith-hennessey-on-tax-reform

Keith Hennessey assesses the prospects for tax reform, which he thinks is more likely to pass if it happens on a revenue-neutral basis, or on a basis in which the additional revenue projected is only modest and related to the growth effects of the rate cuts and simplification. He's not particularly optimistic: "Senator Schumer's comments suggest that Senate Democrats' priority for tax reform is not making the code more efficient or increasing economic growth, it is raising total tax revenues to finance bigger government." He goes on:

If in their budget resolution Senate Democrats require that tax reform raise total taxes by hundreds of billions of dollars or more, then tax reform will at best be an interesting contrast in partisan approaches between Senate Democrats and House Republicans, and at worst a partisan flame-out in which the Senate fails to pass a bill or doesn't even try.

If instead the moderates (and Chairman Baucus?) force the budget resolution to create a reconciliation instruction for revenue-neutral tax reform, or tax reform that only raises revenues by $100-$150B over ten years from dynamic growth effects, then the prospects for significant and bipartisan tax reform in the next two years increase from "hopeless" to "extremely unlikely."

Sorry to be so pessimistic.

by Editor  |  Jan 24, 2013 at 10:34 am Related Topics:  Taxes receive the latest by email: subscribe to the free futureofcapitalism.com mailing list