Have you asked your Senators to save your favorite tax break? Senate Finance Committee Chairman Max Baucus, D-Mont., and Ranking Member Orrin Hatch, R-Utah, have given senators until July 26th to tell them what tax breaks need to be saved as they begin writing tax reform legislation. In a letter to colleagues late last month, the two senators announced they would begin a “blank slate” approach to tax reform, saying:
“We both believe that some existing tax expenditures should be preserved in some form. But the tax code is also littered with preferences for special interests. To make sure that we clear out all the unproductive provisions and simplify in tax reform, we plan to operate from an assumption that all special provisions are out unless there is clear evidence that they: (1) help grow the economy, (2) make the tax code fairer, or (3) effectively promote other important policy objectives.
“Today, we write to ask you to formally submit legislative language or detailed proposals for what tax expenditures meet these tests and should be included in a reformed tax code, as well as other provisions that should be added, repealed or reformed as part of tax reform. In order to give your proposals full consideration as we work to craft a bill, we request these submissions by July 26, 2013.”
Lobbyists of all sorts are inundating senators with arguments for their favorite tax breaks – wind production tax credits for green energy enthusiasts, special carried interest tax rates for hedge fund managers and Wall Street honchos, Last-In-First-Out inventory accounting for businesses, special tax treatment for corporate jet owners, etc. They may or may not be arguing for your favorite.
“America’s tax code is broken,” said Baucus and Hatch. “The last major reform of the tax code was the Tax Reform Act of 1986, which is considered by many as the gold standard for tax reform. However, since then, the economy has changed dramatically and Congress has made more than 15,000 changes to the tax code. The result is a tax base riddled with exclusions, deductions and credits.”
Among the more popular tax breaks is the mortgage interest deduction used by most home owners. The government allows home owners to deduct up to $1 million a year in mortgage interest, including for vacation homes. This costs the U.S. Treasury about $100 billion annually. No-one, including Baucus and Hatch, expect the mortgage interest tax break to disappear, but it could be significantly changed.
Tax breaks for health care, child care, and education are also on the table.
So, time’s a-wastin. Get in touch with Thad Cochran and Roger Wicker to save your favorite tax break. Or, you could just encourage them to wipe out most special interest tax breaks.
BILL CRAWFORD (email@example.com) is a syndicated columnist from Meridian.