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Public Statements

Tax Reform

Floor Speech

Location: Washington, DC

Mr. BAUCUS. The philosopher Bertrand Russell said, ``The greatest challenge to any thinker is stating a problem in a way that will allow a solution.''

I come to the floor today with my good friend Senator Orrin Hatch to state our concerns about a national problem that is holding back our economy. We are here to call on our colleagues to provide ideas that will allow a solution.

First, the problem. America's Tax Code is complex, it is inefficient, and it is acting as a brake on our economy. Senator Hatch and I believe it is in need of a serious overhaul. It has been close to three decades since the last major revision to the Tax Code. In that time Congress has made about 15,000 changes to the Tax Code. The Code now contains nearly 4 million words. Here it is, right here. The Tax Code. This is America's Tax Code, all 24 pounds of it. Paperback. Think how heavy it would be for hard cover. It would take more than 18 days nonstop to read the Tax Code. In fact, it takes the average taxpayer 13 hours to gather and compile the receipts and forms to comply with the code. It costs Americans $160 billion a year to comply with the code, let alone the taxes Americans pay. This complexity in the code is eroding confidence in our economy and creating uncertainty for America's families and businesses.

Clearly, the Tax Code is broken. That is the problem. It is a serious one. The solution calls for a more simple, more fair Tax Code, one that will allow the economy to grow and to create jobs. For the past few years, Senator Hatch and I have been working closely with all of the members of the Senate Finance Committee to reach that goal of comprehensive tax reform. We have held more than 30 hearings. We have heard from hundreds of experts about how tax reform can simplify the system for families, help businesses innovate, and make the United States more competitive.


Mr. BAUCUS. Mr. President, I might say this blank slate is not, of course, the end of the discussion. You do not clear the decks and stop. Some of the provisions in the code obviously serve very important objectives. That is why they made it there in the first place. Some we will need to keep, clearly. Why? To make sure the Tax Code is at least as progressive after tax reform as it is today.

I want to emphasize this approach is just a starting point. It is not a proposal. This is a good, fair, balanced way, a good-faith way, of including all Members of the Senate to get started. We believe it is going to lead to a solution, kind of the way Bertrand Russell suggested: You have to state the problem the way that it is going to lead to a solution. We think this is a good way to get to that solution.


Mr. BAUCUS. Now that we have a blank slate, we are asking all Senators; that is, all Senators, Senators on the committee, Senators off the committee--to submit detailed legislative proposals; that is tax expenditures, the credits, the deductions, exclusions, which they think should be added back that meet the test for growth and for jobs, as well as any other provisions Senators might have in mind that they think should be added or repealed, that they think make sense or other reforms they think make sense.

In order to help guide our colleagues' submissions, we have released some rough estimates the Joint Committee on Taxation and our staffs have been working on. These

estimates show how much the rates would rise, for example, if we add back tax expenditures and keep the current level of progressivity compared to a blank slate.

We put this out today. Why? Because we wanted everybody to know there is a tradeoff involved; that is, when you keep tax expenditures, there is going to be an increase in rates, certainly compared with what otherwise we start with. The more tax expenditures there are, the less revenue there is for a rate reduction and deficit reduction, and the more complicated our Tax Code will end up being.


r. BAUCUS. We also need to remember, this is not just about tax expenditures. There is much more to it than confining our discussion to tax expenditures, because at its core tax reform means making the Tax Code more fair, easier to deal with for families all across our country. There are a lot of loopholes, on the other hand, in the code we should get rid of. People who can afford fancy tax advisers should not be able to take advantage of loopholes regular Americans do not have available to them. As chairman and ranking member of the committee, we are determined to complete tax reform this Congress. We cannot afford to be complacent. Improving the Tax Code provides a great opportunity to spark economic growth, to create jobs, and make U.S. businesses more competitive.

I might add at this point, other countries are modernizing their codes. We are going to be left in the dust if we do not modernize ours. We need to hear from our colleagues as to what provisions they think will help us reach those goals.

I have a great partner in this mission, my good friend Senator Hatch. I will keep communicating and working with the administration and the Senate leadership as we move forward.

Working together we can get this done. I believe strongly that nothing of consequence ever happens around here if one person tries to accomplish something alone on his or her behalf; rather, matters of consequence are accomplished when people work together. We clearly want a matter of consequence to pass here. We will do so by working together.


Mr. BAUCUS. I thank Senator Hatch. It is mutual.


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