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Wednesday, April 3, 2013
8 Questions About Federal Tax Reform
What questions do you have?
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What questions do you have?
Annette Nellen
Professor Annette Nellen
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1 comment:
My question is will tax reform address the budget and revenue estimate processes which have encouraged lawmakers to use temporary tax provisions (i.e. research credits), phase-in/phase-out rules (i.e. itemized deduction and personal exemptions), and sunset provisions (i.e. 2001 and 2003 Bush tax cuts) to meet revenue targets rather than to achieve sound tax policy goals. These practices added complexity and uncertainty to the Code; see the written testimony by Eric Solomon, Assistant Secretary of the Treasury for Tax Policy (2006-2009) to the Senate Finance Committee on March 1, 2011 http://www.finance.senate.gov/imo/media/doc/Solomon.pdf.
Among the examples listed in his testimony, Solomon explained that Congress enacted temporary provisions, such as the research credit, because of the political difficulty in agreeing on viable offsets to make the provisions permanent. As a result, businesses would not know whether the credit would be available in future years when they make their research investment decisions. The uncertainty might have deterred some businesses from committing to the investment; thus reduced the potential impact of the tax incentive.
If Congress is investing effort into tax reform; taxpayers will not want it undone by skewed budgeting processes within a few years. Therefore, my question for tax reform is: Will the current budgeting process that added complexity and uncertainty to the Code be reviewed?
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