New York Times:
Obama Weighs a Broad Tax Overhaul
WASHINGTON — President Obama is considering whether to push early next year for an overhaul of the income tax code to lower rates and raise revenues in what would be his first major effort to begin addressing the long-term growth of the national debt.
While administration officials cautioned on Thursday that no decisions have been made and that any debate in Congress could take years, Mr. Obama has directed his economic team and Treasury Department analysts to review options for closing loopholes and simplifying income taxes for corporations and individuals, though the study of the corporate tax system is farther along, officials said.
The objective is to rid the code of its complex buildup of deductions, credits and exemptions, thereby broadening the base of taxes collected and allowing for lower rates — much like a bipartisan majority on Mr. Obama’s debt-reduction commission recommended last week in its final blueprint for reducing the debt through 2020.
Doing so would offer not only an opportunity to begin confronting the growth in the national debt but also a way to address warnings by American business that corporate tax rates and the costs of complying with the tax code are cutting into their global competitiveness.
Mr. Obama signaled his inclination in off-the-cuff remarks on Wednesday as he was defending the tax cuts deal negotiated with Congressional Republicans this week. “We’ve got to have tax reform,” he said.
Color me skeptical. Why? Because this is a convenient way to deflect the argument that the tax cut deal currently on the table will effectively make Bush tax cuts for the wealthy permanent. Instead of explaining why next time will be different, those making the case for the deal can point to tax code reform as the way to end the Bush tax policy.
Even if the White House is serious about an overhaul, the only sort of reform plan Republicans would agree to is one that continues the basic shape of Bush tax policy. Paul Ryan made that perfectly clear in rejecting the deficit commission plan.
The only leverage the White House will have is if they make it clear that returning to Clinton-era tax rates would be an acceptable outcome two years from now. But as long as they rule out the possibility of returning to Clinton tax policy, as long as they continue to argue that Bush tax policy is superior to Clinton tax policy, Bush tax policy is exactly what we're going to get.