The Senate Budget Committee held hearings on the distribution and efficiency of spending in the Tax Code.
During Wednesday’s hearing, which was conducted while the Senate Finance Committee is convening a separate series of hearings on Tax Code reform, lawmakers heard testimony from three tax experts from a trio of think tanks and advocacy groups.
“The current state of the Tax Code is simply indefensible,” said Senate Budget Committee chairman Kent Conrad, D-N.D. “Our Tax Code is out of date and hurting U.S. competitiveness. It is hemorrhaging revenue to offshore tax havens and abusive tax shelters. The Tax Code is riddled with expiring provisions. This creates enormous uncertainty for citizens and businesses alike, making it very difficult for them to plan ahead. If we took steps to simplify and reform the Tax Code, we could reduce tax rates below where they are today. And tax reform would also allow us to raise more revenue to help address the very serious debt threat hanging over America.”
Robert Greenstein, president of the Center on Budget and Policy Priorities, described some of the recommendations of the bipartisan deficit commission on how to change the Tax Code to bring down the federal budget deficit, along with suggestions of some earlier panels. “As long as we continue to use the Tax Code as a vehicle for advancing social policy, we should take steps to ensure that the tax incentives provided through the code are efficient, effective, and fair,” he said. “And if we are going to step up to the plate and pursue deficit reduction, all parts of the budget—including the Tax Code—should be on the table and should contribute.”
Robert McIntyre, director of Citizens for Tax Justice, suggested that lawmakers stop providing tax giveaways for big business. “Today is the first day of Lent, and I’d like to suggest that members of Congress consider giving something up, not just until Easter, but perhaps until the federal budget is balanced (and even thereafter),” he said. “What I hope you’ll give up is your enthusiasm for providing subsidies to those who don’t need them, in particular, for business subsidies administered by what seems to have become Congress’s favorite agency, the Internal Revenue Service.” He added that “business subsidies are the biggest problem in the Tax Code today.”
Tax Foundation president Scott Hodge noted that over the past two decades, lawmakers have increasingly relied on the Tax Code for advancing “all manner of social and economic objectives, such as encouraging people to: buy hybrid vehicles, turn corn into gasoline, save more for retirement, purchase health insurance, buy a home, replace the home’s windows, adopt children, put them in daycare, take care of Grandma, buy bonds, spend more on research, purchase school supplies, go to college, invest in historic buildings, and the list goes on.”
“In too many respects, the IRS has become an extension of, or rather a substitute for, every other cabinet agency, from Energy and Education to HHS and HUD,” he added. “But perhaps the most troubling development in recent years is that the efforts of lawmakers to use the Tax Code to help low- and middle-income taxpayers have knocked millions of taxpayers off the tax rolls and turned the IRS into an extension of the welfare state.”
“Washington needs to call a truce to using the Tax Code for social or economic goals,” said Hodge.
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