Yet, that’s what happened Monday. The Slurpee White House Summit, long on smiles but short on substance, resolved to send Treasury Secretary Timothy Geithner and Budget Office Chief Jack LewJack LewWhite House divide may derail needed China trade reform 3 unconventional ways Trump can tackle the national debt One year later, the Iran nuclear deal is a success by any measure MORE off in a corner with two senators and two House members to “meet and greet,” civilly of course, and cut a tax deal before Santa arrives with his bag of coal.
President Obama has already appointed a blue ribbon tax reform commission and two budget and deficit commissions that have come up with a lot of good ideas on the tax front, all torpedoed from both the left and the right – meaning these bipartisan experts probably got it just about right.
Here is what the administration and Congress should do, with resolve even if not with conviction:
· Extend all the Bush tax cuts, middle and high income, for one year through 2011. No one would reasonably challenge this stop-gap, mini-approach, given the frail and anemic economy.
· Permanently reduce tax rates starting 2012 to three levels: 8 percent (low), 14 percent (middle) and 23 percent (top) from the current graduated, overly complex structure which starts at 10 percent and tops out at 35 percent.
· Eliminate enough tax loopholes and write-offs so the impact on tax collections from the reduced tax rates is revenue neutral.
Sound simple? It should, because that’s what tax simplification is all about.
This gives the lawmakers 12 months to haggle with “K” Street over the details. If the Solons can’t figure out, again civilly, whose special interest Ox to Gore to get to the breakeven level, then all the loopholes disappear, by default.
If that happens, Halleluiah, 40 percent of the taxpayers won’t need to prepare tax returns anymore because the IRS will do it for them under the “simple tax return” concept, first proposed by Obama during the 2008 campaign, and passionately supported by his new Chair of the Council of Economic Advisers, Austan Goolsbee.
John Klotsche is a former partner and Chairman of the Executive Committee of the international law firm Baker & McKenzie. He served as Senior Advisor to the IRS Commissioner from 2003-2008.