Sunday, January 6, 2013

Tax Reform, R.I.P.

The Simpson-Bowles Commission, which recommended lower personal income tax rates coupled with broadening of the tax base (reducing deductions), is dead and buried.

The reason is that President Obama will not accept any proposals for tax reform that lower the top rate from the new high of 39.6% that he worked so hard to achieve.  Obama has now thoroughly dismantled President Reagan's Tax Reform Act of 1986, which set the top personal rate at 28%.  (It should be remembered that President George H.W. Bush laid the foundation for its dismantling when he signed into law a higher top rate of 31%.)

Perhaps the president and Congress will do something with the corporate income tax.  Who knows?  But the comprehensive tax reform to simplify the tax code, which has been so much discussed in the prattlesphere, is nothing more than idle chatter during Obama's second term.  Indeed, expect Congress and the president to further complicate the code with any new tax legislation.

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