Will Congress Tackle Tax Reform in 2015? Maybe
Tax reform is an issue that politicians love to champion, but rarely tackle. The nation’s tax policies have not been significantly overhauled since 1986, although there have been hundreds of smaller changes to the tax code since then.
Members of Maine’s congressional delegation say party leaders have set their sights on reform this coming year.
Last year at this time, Congress acted on some 48 tax breaks that were set to expire. Among them were provisions that allowed businesses accelerated deductions for job-creating investments, and individual tax breaks to offset the cost of higher education.
But now - in 2015 - those tax breaks have just expired again, and Congress will have to decide whether to extend them for yet another year. Democratic Congresswoman Chellie Pingree, of Maine, says it's not a good way to make tax policy.
"That’s critical tax credits for things like wind energy developers and people in our state who just need to know what their investments in the future are going to look like," Pingree says, "and this uncertainty is just bad for the business."
Pingree says tax policy should be established for at least several years to allow businesses and individuals to plan. She wants comprehensive tax overhaul that eliminates tax breaks that are not actually creating jobs, and that treats taxpayers fairly. Pingree says she hopes the Republican leaders in Congress will allow a bipartisan effort to update the tax system.
Republican Sen. Susan Collins agrees that the tax code should be reformed and stabilized. "We have to get away from this on-again-off-again approach to tax policy. It is impossible for employers to plan, and thus it freezes a lot of investment that otherwise would take place and lead to the creation of new jobs."
Collins says her goal would be to have a simpler, fairer tax system that will be in place for at least a few years to allow for investment planning. Independent Sen. Angus King says he agrees with the same broad goals of fairness and simplicity. An overhaul, King says, is long overdue, as the hundreds of billions of dollars a year in costs linked to various tax breaks continue to increase, without being properly justified.
"Today, even adjusted for inflation, that number is over $1 trillion - in other words, the loopholes and deductions have doubled in real dollars since the last reform in 1986," King says. "That tells me it does need doing."
Republican Congressman-elect Bruce Poliquin says, while fairness and simplicity are worthwhile goals in the tax reform effort, his principal focus would be on lowering the tax burden to spur economic growth.
"Our taxes - here in the state, and here in America - are too high, relative to Canada, to Mexico, to Ireland, to China, to Russia, to other parts of the world," Poliquin says. "So one of the issues I expect the new Congress to address is tax reform. How can we help our businesses be more competitive?"
Poliquin says a lower tax burden on employers would encourage more investment and create more jobs and greater tax revenue for the federal government.
Collins says GOP Senate Leader Mitch McConnell of Kentucky has made tax reform a goal of the new Congress. None of Maine's four members of Congress serves on either of the tax writing committees that will be tasked with developing reform legislation.