|White House release of 2013 State of the Union Address, 2/12/13|
"To hit the rest of our deficit reduction target, we should do what leaders in both parties have already suggested, and save hundreds of billions of dollars by getting rid of tax loopholes and deductions for the well-off and the well-connected. After all, why would we choose to make deeper cuts to education and Medicare just to protect special interest tax breaks? How is that fair? Why is it that deficit reduction is a big emergency justifying making cuts in Social Security benefits but not closing some loopholes? How does that promote growth?
- What are "tax loopholes?" This should really just refer to a rule written poorly so it allows deductions or other special treatment to taxpayers or transactions it was not intended to cover. In the context of getting rid of special deductions, exclusions and credits, "loophole" tends to be used to help send a message that the rule is problematic or even evil.
- Why the focus on getting rid of "tax loopholes" for the "well-off and the well-connected" rather than for all taxpayers? If something is a "loophole" it should go away for all taxpayers.
- Reference to helping small business and not encouraging companies to move jobs offshore sounds like there may be proposals (including past proposals from President Obama) for new tax provisions. President Obama also stated: "We’ll give new tax credits to businesses that hire and invest." More rules usually leads to greater complexity.
- How does President Obama propose that tax reform, entitlement reform and deficit reduction will be carried out? Will tax reform focus more on improving the tax system by reducing complexity and improving equity or will it focus on revenue generation to reduce the deficit? We should know more on this question once President Obama releases his FY 2014 budget soon.
- Congressman Camp noted concerns that President Obama is not calling for simplification but calling for higher taxes to reduce the deficit. Camp notes that President Obama should focus on why 90% of individuals rely on a paid preparer or software to calculate their tax liability.
What do you think regarding what "tax reform" should mean and its prospects?