On Wednesday, conservative Democrat Max Baucus (D-MT) and conservative Republican Orrin Hatch (R-UT), who head the Senate Finance Committee, helped the country reach another nadir in transparency in their efforts at reforming the nation's tax code.
Baucus and Hatch previously decided that to design tax reform legislation, they would create a "blank slate" process, in which senators have to argue for the various credits and deductions that they would like to see kept in the tax code. That's not yet a blow to transparency although it has been a cash cow for K Street.
Here's the troubling part, from the perspective of transparency:
The Senate’s top tax writers have promised their colleagues 50 years worth of secrecy in exchange for suggestions on what deductions and credits to preserve in tax reform.In other words, Baucus and Hatch believe that you, the voting public, have no right to know what your senators want to see in the tax code. That is an affront to transparency and democratic accountability because we cannot keep our legislators accountable if we do not even know what they are proposing and how they are laying out their priorities. If senators would like to see elements of the tax code changed, then they should be willing to stand up for their beliefs and share them with the public--both in their home state and in the country at large.
Senate Finance Committee Chairman Max Baucus (D-Mont.) and the panel’s top Republican, Sen. Orrin Hatch (Utah), assured lawmakers that any submission they receive will be kept under lock and key by the committee and the National Archives until the end of 2064.
Deeming the submissions confidential, the Senate’s top tax writers have said only certain staff members — 10 in all — will get direct access to a senator’s written suggestions. Each submission will also be given its own ID number and be kept on password-protected servers, with printed versions kept in locked safes.
The deadline for tax proposals was yesterday. We'll see how many senators are willing to include the public in the discussion. I know we at least have one: Senator Bernie Sanders of Vermont.
In his letter to Baucus and Hatch, Bernie Sanders turned down the offer for secrecy, noting that he had nothing to hide:
“Given the fact that my suggestions represent the interests of the middle class of this country and not powerful corporate special interests, I have no problem with making them public.”Sanders's plan outlined five major tax proposals that, together, would raise $1.8 trillion in revenue over the next decade.
(1) Closing the loopholes that allow corporations to hide profits overseas: S. 250 The Corporate Tax Dodging Prevention Act
Stop profitable Wall Street banks and corporations from sheltering profits in the Cayman Islands and other tax havens to avoid paying U.S. taxes. Closing that tax loophole would reduce the deficit and create jobs that millions of Americans need.(2) Impose a tax on financial speculation: S. 410, the Wall Street Trading and Speculators Tax Act
Establish a Wall Street speculation fee to ensure that large financial institutions pay their fair share in taxes. A fee of 0.03 percent on the sale of credit default swaps, derivatives, options, futures, and large amounts of stock would reduce gambling on Wall Street, encourage the financial sector to invest in the productive economy, and reduce the deficit by $352 billion over 10 years, according to the Joint Committee on Taxation.(3) Ending tax breaks and subsidies for fossil fuel companies: S. 3080, the End Polluter Welfare Act
End tax breaks and subsidies for oil, gas and coal companies to reduce the deficit by more than $113 billion over the next 10 years. The five largest oil companies in the United States have made more than $1 trillion in profits over the past decade. Exxon Mobil is now the most profitable corporation in the world. Large, profitable fossil fuel companies do not need a tax break.(4) Implementing a carbon tax: the Climate Protection Act
Tax carbon and methane emissions that cause global warming. A bill by Sanders and Sen. Barbara Boxer (D-Calif.), the Senate environment committee chairman, would apply fee at coal mines, oil refineries, national gas processing plants and other sites. Imported fuels would be subject to equivalent carbon fees. Some of the revenue would be returned to consumers and some would pay for investments in energy efficiency, sustainable energy, worker training and deficit reduction.(5) Raising the tax on capital gains
Tax capital gains and dividends of the wealthiest 2 percent at the same rate as ordinary income to yield about $500 billion over the next decade. Today, the wealthy obtain most of their income from capital gains and dividends taxed at a much lower rate than work. The top marginal income tax for working is 39.6 percent, but the top tax rate on corporate dividends and capital gains is only 20 percent. That is not fair.Sanders posted the three letters he sent to Baucus and Hatch on his website. The first deals with proposals #1, #2, #3, and #5 outlined above. The second outlines the rationale for a carbon tax. The third discusses campaign finance reform and outlines measures to address the rise in spending from dark money groups by imposing stricter limits on political activity from 501(c)4s, 5s, and 6s. If they want to do politicking, they should register as political action committees, or 527s.
It will be interesting to see if any other senators are willing to share their ideas with the public. Unfortunately, I do not expect many will jump at the opportunity.