Tax Reform

Last week's release of the final report by a blue-ribbon panel on tax reform for California was accompanied by all the ceremonial obeisance customarily paid to groups of public-spirited citizens completing a difficult task. There was praise for their public spirit and donation of unpaid time. Their report was hailed in Sacramento as a judicious foundation for a necessary reconsideration of our crumbling tax system. I have another view: It was a shamefully squandered opportunity.

This post has been updated, as indicated below. Six-term Sen. Max Baucus (D-Mont.), the chairman of the Senate Finance Committee, announced Tuesday that he won't run for reelection in 2014. You may now kiss any hope of a sweeping tax reform bill goodbye. I'm not saying this out of any particular fandom for Baucus, although I think he's a good guy. I just believe it will be too hard to overhaul the tax code with a lame-duck chairman of the Senate's tax-writing committee.

An old show business adage is that everyone wants to get in on the act, which is what's happening in Sacramento as legislators scramble to propose bills to give tax breaks to Hollywood to keep and develop entertainment jobs in California.

WASHINGTON -- The chairmen of key congressional committees said their bipartisan efforts to overhaul the tax code are on track and still very doable despite the partisan gridlock on Capitol Hill on many issues. "Tax reform can't be about politics," Senate Finance Committee Chairman Max Baucus (D-Mont.) and House Ways and Means Committee Chairman Dave Camp (R-Mich.) said in a joint opinion article Monday in the Wall Street Journal. "It has to be about the people we serve, about boosting the economy, about creating jobs in Montana, Michigan and across America," he said.

Republicans and Democrats agree that the federal tax system is broken, but they couldn't disagree more strongly about how to fix it. That's true largely because each side clings to a different set of theories about how taxes affect the country, only some of which bear much relationship to reality. Hoping to dispel a few of the myths pervading the debate, a Washington think tank offered a report this week laying out a dozen facts about tax reform. The bottom line: Good fiscal policy comes at a steep political cost.

President Obama roiled the business community Monday by proposing to hike taxes on income generated outside the United States. The changes, which supposedly would close loopholes and remove incentives to export jobs and investment, would bring an estimated $210 billion to the Treasury over the next decade. We're all for closing loopholes and ending tax shelters that enable the wealthy to hide income.

Tax reform proposals are the political equivalent of science fiction: entertaining but imaginary. No tax proposal ever passes through Congress unscathed. There are too many interests that believe their survival depends on tax preferences — hence the tax code's immutable tendency to accumulate complexities as a ship collects barnacles. Still, presidential candidates' tax proposals are useful windows into their philosophies. Should income taxes on the wealthy go up or down? Should income from investments be taxed at a different rate than income from labor?

On April 15, every Washington policy wonk's fancy turns to thoughts of streamlining the tax code. This year's most-talked-about idea comes from two iconoclastic senators, Oregon Democrat Ron Wyden and New Hampshire Republican Judd Gregg. The two have proposed a plan that would simplify the tax law, shrink your 1040 form to a single page and even cut taxes slightly for most people who make less than $200,000 a year. Their plan still has a few kinks.

The House and Senate budget committees presented their fiscal 2014 budget proposals this week with sharply different story lines. For House Budget Committee Chairman Paul Ryan (R-Wis.), the point of the exercise was to chart a path to a balanced budget that could be sustained for decades. For Senate Budget Committee Chairwoman Patty Murray (D-Wash.), it was all about reviving the economy and spurring middle-class growth to bring the deficit under control. Strip away the rhetoric, though, and you'll find that both plans have the same basic elements -- you might even say they both lay the groundwork for the long-elusive grand bargain.

The need to deal with the soaring budget deficit, make U.S. businesses more competitive abroad and address the widening gap between rich and poor make U.S. corporate tax reform inevitable, said former top Obama administration economic aide Lawrence Summers. "Leaders in both parties should commit themselves to the goal of tax reform for growth, fairness and deficit reduction," Summers wrote in an opinion article in the Financial Times on Monday. "Nothing that is likely to be done during the next presidential term will be more important.

The House and Senate budget committees presented their fiscal 2014 budget proposals this week with sharply different story lines. For House Budget Committee Chairman Paul Ryan (R-Wis.), the point of the exercise was to chart a path to a balanced budget that could be sustained for decades. For Senate Budget Committee Chairwoman Patty Murray (D-Wash.), it was all about reviving the economy and spurring middle-class growth to bring the deficit under control. Strip away the rhetoric, though, and you'll find that both plans have the same basic elements -- you might even say they both lay the groundwork for the long-elusive grand bargain.

WASHINGTON - In the contentious debate over whether to reduce or eliminate the home-mortgage interest tax deduction - or leave it alone - one fact has been virtually unchallenged: The popular write-off used by millions of American owners costs the government massive amounts of revenue, somewhere in the neighborhood of $100 billion a year. This adds to the federal deficit and debt, and has ranked the deduction high on the hit list of most tax reformers' agendas, including the bipartisan Simpson-Bowles deficit commission's plan.

WASHINGTON -- The bipartisan heads of the federal commission that pushed a sweeping deficit reduction plan in 2011 urged President Obama and Congress to stop playing "small ball" in dealing with the nation's debt. Instead, policymakers should compromise to reach a bold agreement to cut spending and raise revenue, said Erskine Bowles and Alan Simpson, who co-chaired the National Commission on Fiscal Responsibility and Reform. "Our generation created this mess, and it's our generation's responsibility to clean it up together," they wrote in an opinion article in Politico.

WASHINGTON - In the first State of the Union address of his second term, President Obama tried to breathe new life into his economic agenda, offering measures to spur growth and urging Congress to revive stalled talks over deficit reduction. Entering his fifth year presiding over a flagging economy, the president declared the restoration of a strong middle class "our unfinished task" and called on a deeply divided Congress to find "reasonable compromise" to solve the nation's lingering fiscal ills.

In my Wednesday column , I argued that the federal tax deduction for home mortgage interest should be trimmed -- because instead of helping first-time homeowners, a worthy public policy goal, it mostly subsidizes big mortgages. I wasn't surprised to learn that a lot of readers disagreed. Angry emails flooded in. Many of the objections were well reasoned, although one reader just called me a Marxist. He must not have noticed that Mitt Romney, who's not a Marxist, also proposed capping the mortgage deduction -- actually, all itemized deductions -- during his presidential campaign.

The California Legislature's approval rating has rebounded from a horrific 9% to a merely terrible 41%. ALSO: Photo gallery: Ted Rall cartoons McManus: Tax reform that hits home Forget global warming: We're getting too lazy to reproduce Follow Ted Rall on Twitter @TedRall

Former Massachusetts Gov. Mitt Romney has been talking about tax cuts for more than a year, but his bottom line has evolved considerably since last year's 57-point plan for the economy. Those changes raise questions about whether Romney's plan would actually promote economic growth, which was supposedly the point. The answer depends on the details, many of which Romney hasn't provided. But if it's designed the right way, a tax reform like the one Romney has advocated could still spur growth, even if it doesn't actually cut the tax bill faced by "job creators.

Would you support a tax reform measure that could help reduce the federal deficit, remove a needless distortion in the economy and make the system fairer? Me too, which is why I'm taking aim at a sacred cow: the home mortgage interest deduction. That's right, the mortgage interest deduction that every homeowner, including me, loves. If you listen to home builders and real estate agents, they'll tell you that the mortgage interest deduction is what makes homeownership possible for millions of Americans.

Would you support a tax reform measure that could help reduce the federal deficit, remove a needless distortion in the economy and make the system fairer? Me too, which is why I'm taking aim at a sacred cow: the home mortgage interest deduction. That's right, the mortgage interest deduction that every homeowner, including me, loves. If you listen to home builders and real estate agents, they'll tell you that the mortgage interest deduction is what makes homeownership possible for millions of Americans.

As President Obama's second term gets underway, there is a growing debate about whether comprehensive immigration reform will remain a priority given the ambitious agenda he has outlined, including the need to address the budget, tax reform, climate change and gun violence. So far, the White House continues to say that immigration reform is on the front burner. More important, the administration is acting as if it is a priority. This week, for example,  administration officials met with key members of the Congressional Hispanic Caucus to discuss how to push forward legislation.