Overhaul of tax system won’t be easy


Associated Press

WASHINGTON

Congressional Republicans are planning a massive overhaul of the nation’s tax system, a heavy political lift that ultimately could affect families at every income level and businesses of every size.

Their goal is to simplify a complicated tax code that rewards wealthy people with smart accountants, and corporations that can easily shift profits – and jobs – overseas. It won’t be easy. The last time it was done was 30 years ago.

Senate Majority Leader Mitch McConnell, R-Ky., and Speaker Paul Ryan, R-Wis., have vowed to pass a tax package in 2017 that would not add to the budget deficit. The Washington term is “revenue neutral.”

It means that for every tax cut, there has to be a tax increase, creating winners and losers. Lawmakers would get some leeway if nonpartisan congressional analysts project that a tax cut would increase economic growth, raising revenue without increasing taxes.

Nevertheless, passing a massive tax package will require some tough votes, politically.

Some key Republican senators want to share the political risk with Democrats. They argue that a tax overhaul must be bipartisan to be fully embraced by the public. They cite President Barack Obama’s health law – which passed in 2010 without any Republican votes – as a major policy initiative that remains divisive.

Congressional Democrats say they are eager to have a say in overhauling the tax code. But McConnell, who faulted Democrats for acting unilaterally on health care, is laying the groundwork to pass a purely partisan bill.

Both McConnell and Ryan said they plan to use a legislative maneuver that would prevent Senate Democrats from using the filibuster to block a tax bill.

McConnell says he wants the Senate to tackle a tax plan in the spring, after Congress repeals Obama’s health law. House Republicans are more eager to get started but haven’t set a time line.

House Republicans have released the outline of a tax plan that would lower the top individual income tax rate from 39.6 percent to 33 percent, and reduce the number of tax brackets from seven to three. The gist of the plan is to lower tax rates for just about everyone, and make up the lost revenue by scaling back exemptions, deductions and credits.

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