Tax Reform: Baucus Starting from Scratch with Zero Breaks

The Senate Finance Committee will begin its consideration of revisions to the tax code with a proposal that would eliminate all tax breaks and ask lawmakers to justify their restoration, say three congressional aides familiar with the proposal.

The concept could be unveiled as early as tomorrow. The aides spoke on condition of anonymity in order to discuss the idea in advance of its release.

The Finance Committee, led by Montana Democrat Max Baucus, has been meeting behind closed doors for several months, reviewing various aspects of the tax code. It wasn’t immediately clear if the zero-break proposal would apply to both personal and business deductions.

The committee has moved more slowly than its counterpart in the House, where Ways and Means Chairman Dave Camp, a Michigan Republican, has released drafts of three pieces of his tax proposal and pledged to pass it through his committee by the end of the year.

One aide said Baucus was seeking committee action in September. Another aide said Baucus and Orrin Hatch of Utah, the top Republican on the committee, would issue a letter to senators tomorrow seeking their input.

Sean Neary, a spokesman for Baucus, and Julia Lawless, a spokeswoman for Hatch, both declined to comment.

The biggest question on the tax code is whether a rewritten system would raise more money for the government. Baucus and any Democrats say it should; Republicans say it shouldn’t.

Baucus has said Congress should defer a decision on that issue.

That’s not the only question. Lawmakers will also skirmish over which breaks should remain and the distribution of the tax burden across income groups.

“Most of us are demanding that it be at least as progressive as the tax system is now,” said committee member
Sherrod Brown, an Ohio Democrat. He declined to discuss the committee’s process.

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