When House Speaker Paul Ryan held a town hall meeting in Racine recently, tax reform came up. It’s a priority he’s been talking about for the last decade.
Now is the time to do more than talk.
The tax code is broken and unfair. Congress last overhauled it more than 30 years ago. And seemingly every year since then, lawmakers have added more exemptions that serve special interests and more loopholes that appease big campaign donors.
The resulting byzantine tax system frustrates most filers. It serves only accountants and their clients who can afford to pay someone else to ferret out every deduction and write-off.
Despite broad consensus for reform, Ryan, R-Janesville, has not gained much legislative traction over the years. He’s been all talk.
For eight years, a big sticking point was Democratic President Barrack Obama, who disagreed with Ryan on the right solution. Obama is no longer president, so that excuse is gone. President Donald Trump is desperate for a legislative victory and wants tax reform. Ryan finally has an opportunity to succeed.
After his nationally televised town hall two weeks ago in his congressional district, Ryan took his proposal on the road to the West Coast. His core ideas for reform are: cut taxes for families, cut taxes for businesses and simplify the tax code.
Cutting taxes for families, especially middle-class families, is hardly controversial. Tax cuts for wealthier families is more difficult to build consensus around. But the reality is that if cuts are to occur, the people who pay the greatest share of all personal income taxes are bound to share in them.
Cutting taxes for businesses has opponents on the far left, but most leaders agree on the need. America’s corporate tax rate is one of the highest in the developed world. It encourages corporations to shift profits overseas and discourages reinvestment at home. That hinders economic growth, innovation and job creation.
Finally, simplifying the tax code has strong support among the public. At more than 4 million words — nearly five times as long as the Bible, according to Politifact — it needs it. Ryan’s idea of completing your taxes on just a postcard might be optimistic, but it’s a good goal.
Controversies emerge when the discussion turns to specifics. How much should the wealthy benefit versus the middle class and poor? How many tax brackets should there be? What is the right rate for corporate taxes?
The sort of comprehensive reform the nation needs must address those and many more questions. To survive past a congress or two and the current president, reform must win support from both Democrats and Republicans. It doesn’t have to be unanimous, but it does need to include compromise.
It will take strong leadership from Ryan to reach a deal. And the task is made even more difficult by America’s precarious finances. Successful reform should end with something that is revenue neutral or even revenue positive so the nation doesn’t dig even deeper into debt.
Ryan has a chance to become a historic leader who accomplishes tax reform in a particularly divisive time. In the next few months, Wisconsin and the nation will see if he is up to the task.
(c)2017 The Wisconsin State Journal (Madison, Wis.)
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