In the 11 tax reform working groups that we set up on a bipartisan basis, based on reports to date and my personal participation, we are making progress toward understanding present laws and their pluses and minuses and their possible implications for the policy challenges we face.
In an important sense, the hearing today illustrates that challenge as we address tax reform.
Republicans, in the budget to be voted on this week, have once again reaffirmed their goal of collapsing the current rate structure to two brackets with a top rate of 25 percent.
An analysis by the nonpartisan Tax Policy Center has indicated that the rate reduction and other specific tax policies in that budget would cost $5.7 trillion over 10 years. Yet the budget gives no indication or illustration of how to address this huge gap, most of which would involve Ways and Means jurisdiction.
We are all familiar with the President’s proposal to cap deductions at 28%. Various proposals to limit deductions and tax preferences have been put forth in the past. I believe that there is value in considering thoughtful proposals as we seek a balanced approach to deficit reduction.
However, the differences of opinion in the testimony before us today on one set of tax policies - those relating to state and local government - illustrate the need to distinguish between rhetoric and reality in addressing the important issue of tax reform.
