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Baker and Gephardt Urge Tax Reform

April 6, 2011

The congressional Joint Committee on Taxation held a hearing Wednesday on tax reform, and heard testimony from former Treasury Secretary and White House Chief of Staff James Baker and former House Democratic Leader Dick Gephardt on their experiences during the 1986 tax reforms.

The two men, who helped shepherd the reforms during the Reagan administration, encouraged lawmakers to work toward long-term tax reform without getting mired in the current budget debate. “If tax reforms get caught up in that, you won’t have tax reform,” Baker said, according to

The Joint Committee on Taxation includes the leaders of the tax-writing committees in the Senate and the House.

Gephardt encouraged lawmakers to stay away from the current budget squabbles when they’re setting tax policy over the long haul.

“You’ve got to be bipartisan, you've got to have a core group that really believes in this and is willing to do the heavy lifting to get it done,” said Gephardt, according to the St. Louis Beacon. “And I think it is important to try, if you can, to disassociate [tax reform] from the budget issue.”

Still, the budget has to be top of mind right now among lawmakers. President Obama has called a meeting for Wednesday evening with Senate Majority Leader Harry Reid, D-Nev., and Speaker of the House John Boehner, R-Ohio, to try to resolve the budget impasse to avert a government shutdown.

During the hearing, committee leaders referred to the fiscal 2012 budget unveiled by House Republicans on Tuesday.

“House Republicans put out their budget yesterday, and it highlights, I think, one of the major differences between now and 1986: the deep differences of opinion that exist between the two parties in Congress,” said Rep. Sander Levin, D-Mich., the ranking Democrat on the House Ways and Means Committee. “We must address the deficit. We must not do so as a way to turn back the clock on more than half a century of progress that helped foster the American middle class. The Republican budget calls for unprecedented cuts that would lead to the unraveling of Medicare and Social Security. On tax policy, it embraces more tax cuts for the wealthiest and a higher burden for everyone else.”

Orrin Hatch, R-Utah, the ranking Republican member of the Senate Finance Committee, has sat through a series of hearings on tax reform. “If there’s one thing I’ve learned from the hearings we’ve held in the Finance Committee and will continue to hold, it’s that tax reform is very, very complicated,” he said. “At times it seems impossible that we could come to any sort of agreement within the committee, much less in both houses of Congress. However, whenever we are sifting through the minutiae of tax reform, of which there is plenty, it is reassuring to know that it has been done before. That is why it is so valuable to hear from two of the victors of the 1986 tax reform. Secretary Baker and Leader Gephardt have helped to accomplish what we are now trying to do.”

House Ways and Means Committee Chairman Dave Camp, R-Mich., also commended Baker and Gephardt for their work, but noted how their tax reforms had been subverted over the years, thanks to Congress.

“As two of the key architects to the 1986 tax reform plan, you each bring a unique perspective to the debate that Congress has again embarked on—how to craft meaningful, comprehensive tax reform that strikes the necessary balance of ensuring government has the resources it needs to provide for critical functions, while also allowing the private sector—employers and families—the freedom to grow and thrive,” he said. “The ‘86 Act remains the basis of our system of taxation. But it is, in some sense, a shell of its former self. In the intervening years, members of Congress—from both sides of the aisle—have loaded the Tax Code with a dizzying array of credits, deductions, exclusions and exemptions. While the merits of each of these changes can be debated, discussed and analyzed, the overall effect of those changes on the Tax Code itself is beyond question. With nearly 4,500 changes in the last decade alone, the code is too complex. And, with Americans spending over 6 billion hours and over $160 billion annually to comply with the code, it is too costly and too burdensome. Clearly, the time for comprehensive reform has come, and I am committed to finding a path forward.”

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