Tax Reform: The Options

As part of their effort to reform the tax code, the House Ways and Means Committee created a series of working groups and put out a call for public comment on tax reform ideas. Appropriately enough, submissions to the working groups faced an April 15th deadline, and since then the Joint Committee on Taxation has been working on creating a report that reviews current tax law and tries to make some sense of the mountain of submissions (ours is here) they received. On Monday, the JCT released their report, and as one might expect, it weighs in at a substantial 568 pages. and tasked JCT with compiling and sorting the results.

There are three big sections to the report, first the overview of current law, then a section on “Summaries of Selected Tax Reform Proposals,” this amounts to some combination of “Tax Reform’s Greatest Hits” and “The Usual Suspects,” Simpson-Bowles, President George W. Bush’s 2005 tax reform panel, Wyden-Coats, Heritage, CAP and so on and so forth. The third and final section has the summary of suggestions received from the public comment process.

That’s all well and good, but still, what’s in it, you ask? Well, just about everything, did I mention that it is 568 pages long? Thanks to the miracle of Control+F, if you know what to look for you can find it pretty easily. For instance, if you search for “Saver’s Credit” you’ll find a pretty straightforward description of the current law provision on page 343. You’ll also find various proposals to reform and expand the credit. You recognize pretty quickly that the good, hard-working folks from JCT had a Restaurant:Impossible like task in making something meaningful out of all the submission received. It’s not easy to get a good result with too much to do, not enough time, and not enough money/staff, but what they’ve done is put together a menu for Ways and Means and from what I can tell they’ve done so in a pretty comprehensive way.

The work isn’t done though. As I may have mentioned, the menu is 568 pages long. If there are certain provisions that were interesting to people, they should still try to bring them to the attention of policymakers. For example, say you thought that the lack of non-retirement savings was undermining both the day-to-day financial security of Americans and their prospects for a secure retirement, well, then you might want to highlight the 539th page of the PDF, where options for reforming the Saver’s Credit include:

(4) provide the credit as a contribution to an account that can be used for short-term emergency needs rather than just a retirement account, (5) enable individuals to open and make contributions to tax-favored accounts through the filing of their income tax returns and provide a dollar-for-dollar match of up to $500 for low- and middle-income individuals;

Just like reading (or compiling) this report, tax reform is going to take a long time, it’s important to make sure that this report isn’t the last word on the subject.