BRIAN HOWEY: A bipartisan push toward U.S. tax reform

2013-08-18T00:00:00Z 2013-08-22T13:32:16Z BRIAN HOWEY: A bipartisan push toward U.S. tax reformBy Brian Howey nwitimes.com
August 18, 2013 12:00 am  • 

The U.S. jobless rate is 7.4 percent. Here in Indiana, it stands at 8.4 percent.

This is so utterly unacceptable that our lawmakers at both levels ought to be considering everything in order to stimulate the economy. And they need to do it in a bipartisan fashion.

The impact of this is something right out of Pandora’s Box, as Indiana’s suicide rate is soaring and our infant mortality rate is 7.7 per 1,000 births, a statistic that left Indiana Health Commissioner William VanNess “aghast.” Thousands of Hoosier kids flirt with chronic hunger.

The U.S. tax code, with a 35 percent rate, is hindering the creation of jobs, said U.S. Rep. Todd Young, the Bloomington Republican who is seeking an overhaul. For many small businesses, the rate is 44.6 percent.

"Add in state income taxes, and over half of their profits go to taxes," said Young, who sits on the tax-writing House Ways & Means Committee. Young is pushing a 25 percent tax rate, which is the average of industrialized nations and would allow the U.S. to better compete globally.

It brings House Republicans on to a similar page as President Barack Obama. In a July 30 speech in Chattanooga, Tenn., Obama called for a corporate tax rate cut to 28 percent and to give manufacturers a preferred rate of 25 percent. He advocates a minimum tax on foreign earnings as a tool against corporate tax evasion and the use of tax havens.

"If we don't make these investments and reforms, we might as well throw up the white flag while the rest of the world forges ahead in a global economy," Obama said. "And that does nothing to help the middle class."

The fact that House Ways & Means Chairman Dave Camp, R-Mich., and Senate Joint Committee on Taxation Chairman Max Baucus, D-Mont., are conducting a series of "Max and Dave" forums pushing a simpler, fairer, flatter tax code gives the movement credibility.

So with gridlock gripping Washington, this appears to be an avenue to actually get something done.

Young said it is becoming clear that people are "growing weary of austerity." He said that reforming entitlements is proving to be difficult getting key players aligned into a compromise. It is the tax code revision that holds the most promise, believing it would "grow the economy, create more jobs and make us more competitive."

Young and Cam Carter, vice president of the Indiana Chamber of Commerce, see the federal tax code "larded" with loopholes. The goal would be to close off many of them. They believe it can be done in a "revenue neutral" manner that would then stimulate the economy.

John T. Thompson, chairman and CEO of First Electric Supply in Indianapolis, added, "A 25 percent corporate rate would make a tremendous difference in job creation," saying increased profits and dividends would be "reinvested back into business. That's what creates economic growth."

Young said the tax code for individual taxpayers doesn't have as many loopholes. The approach he is taking is to essentially "start with a blank sheet of paper" and "take a look at everything."

Baucus told National Public Radio a bipartisan conversation is underway on Capitol Hill. "There's going to be compromise. In the meantime, let's work to get the code in much better shape."

Camp explained, "I don't think we'd be doing our job if we started off with saying, 'Well, we don't agree on something, so let's just stop.' And, clearly, I think if we can get the right policy, that's what we really need to look for."

"It's been bipartisan effort the entire way," said Young, who acknowledged poll after poll has shown American voters want Congress to achieve results on key issues.

In May, Pew Research polling showed 72 percent favor a major change. That included 75 percent of Republicans and independents and 69 percent of Democrats. Pew noted it found "an unusual level of public agreement that the tax system needs sweeping changes."

Pew observed: Surprisingly, relatively few people — just 11 percent — said their biggest complaint was the large amount they paid in taxes. Even among those with family incomes of $100,000 or more, only 17 percent said they were most bothered by how much they had to pay. Rather, most people (57 percent) were bothered by what they saw as the system’s basic unfairness — “the feeling that some wealthy people get away with not paying their fair share.” Only about half as many — 28 percent — pointed to the tax system’s complexity.

The danger to this process is when a specific set of reforms is established, all the special interests will isolate the changes that will hit them, potentially scuttling the entire package.

Young sees a path, using upcoming debt ceiling and continuing resolution votes not to shut down the government, as some have advocated, but to use as leverage to get a deal. “People want us to get something done in Washington,” he said. “That’s what people are asking us to do.”

He called it “statesmanship.”

Carter agreed, saying the nation needs Congress to "act less like politicians and more like statesmen."

Brian Howey is publisher of Howey Politics Indiana. Follow him on Twitter @hwypol. The opinions are the writer's.

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