In an effort to recreate the 1986 tax overhaul, which reduced the tax rate to the lowest since the Coolidge era, DINO Max Baucus and his house counterpart, Dave Camp, have proposed that any tax "reform," lower rates and be revenue neutral. That is, for now, and on paper, the money raised from the old and new tax code be the same. That was the theory behind the '86 law, but soon enough the old "loopholes" for the top began creeping back in. Which led, in part, to an increase in tax rates under Bush I and Clinton.
But fortunately, at least on this aspect of tax "reform," the Obama administration has shot down the Baucus-Camp proposal:
Such an approach would be directly at odds with the White House and Senate Democratic leadership. And at a background briefing on the budget Tuesday evening, two senior White House officials rejected the Baucus-Camp approach.
Obama, they noted, is open to realizing the $580 billion in income tax revenue in his budget through a tax reform process, provided any reforms are as progressive as the current code. But he’d oppose efforts to reduce tax expenditure benefits for higher-income earners, only to plow those revenues into lowering the same earners’ rates. That, they noted, would close the door on revenue they insist needs to be applied to reducing deficits.
One official pointed to comments from Senate Democratic aides noting that tax reform won’t happen on Baucus’ terms if he goes off the reservation. But Baucus is up for reelection in red Montana this year. And if he defies the White House and leadership in pursuit of non-viable tax reform, he’ll undermine a Democratic Party tax consensus that took leaders years to build.
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