Still, it remains to be seen how much backing Wyden and Coats will get for their proposal.
Rep. Dave Camp (R-Mich.), the chairman of the tax-writing House Ways and Means Committee, has pitched his own framework for a tax reform plan in recent weeks. On the other side of the Capitol, Sen. Max BaucusMax BaucusChanging of the guard at DC’s top lobby firm GOP hasn’t reached out to centrist Dem senators Five reasons why Tillerson is likely to get through MORE (D-Mont.), the chairman of the Finance Committee, has said that he wants a thorough set of hearings to examine the tax code.
A spokeswoman for the House Ways and Means Committee said in a statement that it was encouraging that lawmakers from both parties and chambers want to alter a tax code that is a barrier to job creation.
“As we take next steps toward comprehensive tax reform, we’ll continue to look at ways to develop and advance policies that promote job growth and empower families,” the spokeswoman said.
Many of the details in Wyden and Coats’ proposal mirror the legislation introduced in February 2010, a plan that the Urban-Brookings Tax Policy Center found basically broke even revenue-wise and crafted a more progressive tax code.
But the current legislation also proposes allowing corporations to temporarily bring overseas profits back to the United States effectively at a rate of 5.25 percent — the same rate corporations enjoyed in a tax holiday Congress enacted in 2004.
The repatriation holiday, Wyden said, would serve as a transition to a system where corporations would no longer be able to defer paying taxes on certain profits kept abroad.
Some corporations have instead been hoping that the U.S. would switch to a so-called territorial system, which is used by many other developed countries and would essentially allow the federal government to only tax corporate profits earned within its borders.
But Wyden said that his plan with Coats has gotten positive feedback from the corporate community, who are attracted to both the tax holiday and the proposal to install a flat corporate tax rate of 24 percent.
“They say that’s pretty business friendly,” Wyden said.
The current top corporate rate is 35 percent, and the reduction proposed by Wyden and Coats would bring America’s comparatively high corporate tax rate more in line with other developed countries.
On the individual side, the measure would shave the tax brackets from six down to three (15 percent, 25 percent, 35 percent), scrap the Alternative Minimum Tax and almost triple the standard deduction. Those changes, Wyden and Coats say, would allow most taxpayers to use a one-page 1040 form.
The idea of tax reform has been well received by Washington policymakers, with the so-called “Gang of Six,” the bipartisan group of senators looking to narrow long-term fiscal deficits, among those discussing the issue.
For his part, Camp recently signaled that he would push to lower both the top corporate and individual rates to 25 percent.
Lawmakers acknowledge that crafting a tax reform plan will take time, and recognize there will be some hang-ups along the way.
The Obama administration, for instance, has expressed more of an interest in reforming the corporate tax code, while Camp, Wyden and others prefer a more comprehensive overhaul of the tax code. And some business leaders and GOP lawmakers have said that a tax reform plan shouldn’t be as concerned, at least at first, with being revenue-neutral.
Coats, who previously served in the Senate and returned to the chamber this year after more than a decade away, called for tax reform during his campaign last year. He was also in the House 25 years ago during the last comprehensive overhaul of the tax code.
Wyden has been fond of touting the economic growth that occurred after that 1986 reform of the tax code, repeatedly noting that more than 6 million jobs were created in the two years following that legislation.
“You’re going to hear me say that so many times, you’re going to plug your ears,” Wyden said. “But it’s part of the message.”