The Joint Committee’s Report on Tax Reform: Must-read for Policy Geeks

By :: May 7th, 2013

If you are a tax geek, or even a normal person who wants to keep up with the ongoing debate over restructuring the tax code, download a copy of the congressional Joint Tax Committee’s Tax Reform Working Group Report.

It is 568 pages long, doesn’t have much of a plot, has no character development (unless you are good at reading between the lines) and sort of peters out at the end. Yet, it is likely to prove an invaluable resource as tax reform moves ahead.

Think of it as the ballpark program you pick up before a baseball game.  You can watch the game without it, but it is much more fun if you can keep score and know a little something about who plays for the visiting team.

The report is divided into three parts. The first is a brief summary of the revenue code. Each provision of the law gets explained in a couple of sentences or, sometimes, a few paragraphs. You’ll learn about everything from adoption assistance to retirement plans, and from the tax treatment of U.S. territories to depreciation of manufacturing equipment.

And, btw, it answers the musical question: How long does it take to describe the federal tax law in this shorthand? Answer: 444 single-spaced pages.  

The second section summarizes a dozen different tax reform plans—ranging from President George W. Bush’s 2005 reform commission report to President Obama’s fiscal commission plan (aka Bowles-Simpson), and including proposals from the liberal Economic Policy Institute to the conservative Heritage Foundation (Full disclosure: the Tax Policy Center provided technical analysis for many of these plans).

The third section attempts to summarize public comments to the House Ways & Means Committee’s tax reform working groups. This section describes, in JCT’s best “just the facts” tone, the wide range of ideas presented to the work groups. They can be summarized like this: Keep the government’s filthy hands off my tax break.

The plot of the JCT tome, then, reads something like this: The tax code is mind-numbingly complicated and economically inefficient. Just about every reform plan from presidents Bush to Obama and across the spectrum of think-tanks would trim or even eliminate many of the tax code’s $1 trillion+ in preferences. Yet, pretty much every lobbyist who commented to the Ways & Means working groups echoed the long-ago doggerel of former Senate Finance Committee chairman Russell Long—“Don’t tax me, don’t tax thee, tax the fella behind the tree.”

And there we stand.

Nonetheless, download the JCT’s report. You’ll find yourself looking at it often.

11Comments

  1. Michael Bindner  ::  6:52 pm on May 7th, 2013:

    I’ll have to take a look at it and see if they noticed my comments.

  2. AMTbuff  ::  11:47 pm on May 7th, 2013:

    That’s a lot of reading time to spend on a theoretical exercise with no practical application. What will actually happen is meat axe instant tax reform when the fiscal crisis hits. Maybe something as crude as taxing gross income, period. The more elaborate the plan, the less likely it will resemble any tax reform enacted in the future.

  3. David Lloyd-Jones  ::  12:22 am on May 8th, 2013:

    AMT,

    The US is in luck: it has Canada to try stuff out first.

    Obamneycare is a silly welfare program for insurance companies, and it will obviously collapse. There will be an amusing first stage, of course, during which CanadaCare looms on the horizon and the insurance industry realises that a license to rip off 6% of GDP in overhead and profit is something to have. During this stage there will be a pro-Obamneycare tsunami of publicity which will make the few hundred millions of dollars spent on Harry and Louise look tiny.

    That may work for a few years, but the end result is clear now. Didn’t Churchill saing somethng about America doing the right thing, butonly after they’ve tried everything else first? Well, that’s how health care will work out.

    On tax, similarly, Canada has the answer. Maybe I’ll trademark that: Canada Has The Answer (t.m., copyright, patent pending).

    The Canadian Goods and Service Tax has wonderful things going for it: conservatives are dumb enough to think it’s a flat tax, or even better, a regressive sales tax. Liberals, by contrast, can do math, and know that it’s a nice way of balancing the budget.

    Here’s what’s really great about it: the ninth decile of taxpayers is where the real hole is: Milovan Djilas’s (remember him?) New Class is both the producers and consumers of information based wealth. They’re not the owners or the partners, but there are a lot of ’em.

    And since lots of them are lawyers and accountants, they basically pay whatever taxes they feel liike paying. That’s how they crank it down into the ninth decile.

    The only way you can tax these people is by taxing their consumption. Bing! Goods and Services Tax!

    Think about that. Savor it slowly. What is a services tax? It’s a Value Added Tax on services. Baby-sitters. House cleanng services. Lawyers. Accountants. “Hostesses.” Farriers. Veterinarians.

    It hits everybody, yup — but it hits the rich far far more, because poor folks buy stuff, but rich folks buy services, experiences, thin air — and they can be made to pay a GST on it.

    It works where a graduated income tax doesn’t, for the very good reason that nobody can define income well enough to keep the New Class from defining themselves out of it.

    Collecting it? Not a problem: Visa and MasterCard collect it for you.

    Two final bits of good news: a services tax cuts down the differential harm to manufacturing, and hence the pressure to overseas outsourcing. More tax on services mean less tax n metal-bening.

    Best, from a political point of view, a services tax is collected in real time by every small business, but it’s sent in to the Feds maybe four times a year. The float is awesome — free working capital for small business. When the bill to the Feds comes due four times a year, they have bulletproof numbers to back up a cheap overdraft at the bank, so when it’s not free operating slop it’s cheap, verifiable, and rational bank credit for small business.

    Think Canada: pioneer of the possible, teacher of the empirical, America’s guide dog into the future! Maybe I’ll trademark those as well…

    Cheers,

    -dlj.

  4. Tax Roundup, 5/8/2013: Still no tax fairy. And no fiscal heroes. « Roth & Company, P.C  ::  9:21 am on May 8th, 2013:

    […] Howard Gleckman,  The Joint Committee’s Report on Tax Reform: Must-read for Policy Geeks: […]

  5. AMTbuff  ::  3:11 pm on May 8th, 2013:

    “It hits everybody, yup — but it hits the rich far far more, because poor folks buy stuff, but rich folks buy services, experiences, thin air — and they can be made to pay a GST on it.”

    That’s a VERY interesting observation.

    This tax would, to some extent, encourage people to buy their services outside the US if possible. Medical and dental tourism would flourish. Non-US air carriers based in low-tax jurisdictions would have a cost advantage. I’m pretty sure foreign flagged cruise lines would fine a way to avoid the tax, e.g. sailing from the Bahamas rather than from Ft. Lauderdale.

    Average expenses like car repair, routine dentistry, and even day care would be taxed in full. It’s certainly true that affluent people spend more on these services.

    Such a tax would be unfair to people who are for medical reasons unable to perform routine services such as housekeeping themselves.

  6. David Lloyd-Jones  ::  4:45 pm on May 8th, 2013:

    Medical and dental tourism are aleady flourishing: Canada’s hospitals all stay in the red by skinning Americans.

    The cruise lines are already offshore, but they have to sell their tickets in the US, and their payments have to clear through US banks. Sure you can envision every wealthy American tourist slinking offshore in their banking and even their grocery shopping — the way 4D Corporation, that patriotic snivelling supporter of the John Birch Society, slunk off to the Bahamas — but that just means more work for their (taxed) on-shore tax-accountants and defence lawyers.

    Meself I’m perfectly happy to see the wealth being spread around to Third World cruise ship waiters and such: they end up investing their savings in Malaysia or wherever — funds for my Tokyo-based investment banker daughter to deploy — and passing the income around in what used to be the exploited empires of the world is a wonderful thing to see. Pity about all that on-board diarrhea…

    Long story short: America will get the society its people are willing to pay for. As long as any large minority are willing to pay to be outlaws, there’ll be that nice outlaw mythology — and a certain number of people who live it out with Bushmasters.

    You’ll get the society you choose as a group to make.

    Oh, and those stay-at-homes and their servants. Yes, they’ll be taxed. With luck they’ll also be unionized and pensioned.

    -dlj.

  7. tax depreciation report  ::  4:46 am on June 4th, 2013:

    Just downloaded the report. I especially liked depreciation of manufacturing equipment part.

  8. Michael Bindner  ::  2:04 pm on June 26th, 2013:

    It does not appear so, as I responded to hearings rather than white papers, which are harder to find on their site.

  9. Michael Bindner  ::  2:06 pm on June 26th, 2013:

    Slowing health care costs and higher taxes on the rich have eliminated the crisis. Tax reform should be done for reasons of competitiveness and additional relief for families with kids. The need to do it to soak the rich went away January 2nd.

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