The Senate Finance Committee heard testimony about U.S. tax policy at a hearing on tax fundamentals in advance of reform efforts that Congress plans to undertake.

"Some folks say that tax reform is like mowing the lawn," said committee Chairman Max Baucus, D-Mont., in his opening statement. "You have to do it pretty regularly because it keeps growing back.  Pretty clearly, it's time to get out the lawnmower."

Ranking minority member Chuck Grassley (pictured), R-Iowa, characterized the event as a "kick-off hearing." "If we are to enter the tax reform playing field, we need to know the rules, including the size of the playing field in revenue terms," he said.

The committee heard testimony from Robert J. Carroll, vice president of economic policy at the Tax Foundation. "Today, the U.S. tax system remains a complicated web of tax rules that impose substantial compliance and economic costs on the economy," he said. "The number of special tax provisions with complex phase-ins and phase-outs continues to grow. These provisions may be well-intentioned, but they increase compliance burdens, narrow the tax base and require higher tax rates to raise a given amount of revenue."

Daniel N. Shaviro, a taxation professor at New York University School of Law, criticized the business tax system. "Our rules for taxing business enterprises are badly broken," he said. "At the business level, the fact that major corporations commonly report high book income to their shareholders and low taxable income to the IRS is an important diagnostic, suggesting that something is wrong."

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