Tax Reform in 2011?

Plot of top bracket from U.S. Federal Marginal...

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While most experts agree about the need for income tax reform, they also agree that it’s unlikely to happen in 2011, or even before the next Presidential election in 2012. Here are some reasons to support their views.

President Obama isn’t on board. The president could have used the tax reform plans offered by his own fiscal commission or the Bipartisan Policy Center as an opportunity to jump-start the debate. But he called only for a national conversation on taxes. As Ronald Reagan showed with the 1986 Tax Reform Act, a major rewrite of the revenue code requires a full-court press by the White House. To get a bill moving, Obama would have to send a complete reform plan to Congress and keep up the pressure for passage. There is no sign he’s ready to do that.

Hill Republicans are not on board. New Ways & Means Committee Chairman Dave Camp (R-MI) says tax reform will be one of his priorities, and that’s a good thing. But House Speaker John Boehner (R-OH) has little interest in supporting real reform.

In the Senate, Democrat Ron Wyden (D-OR) still has his rewrite, but his GOP co-sponsor, Judd Gregg, has retired and Republicans are not exactly lining up to take his place. Republicans would surely back further rate reductions, but they have no interest in cutting tax subsidies–the hard part of reform. And does anyone seriously think the GOP would give the President an historic victory on tax reform on the eve of a presidential election campaign?

Hill Democrats are not on board, either. After their battering in last year’s elections, Democrats want only one thing between now and November, 2012–a plummeting unemployment rate. And they don’t see how a nasty protracted debate over tax reform will create many jobs.

But in the face of a $1 trillion-plus deficit and growing fiscal pressures down the road, the next reform would have to raise more revenues. The growing clout of the anti-tax activists who make up much of the tea party movement will make it even tougher for GOP lawmakers to budge on new revenues.

20th Century Decades Learning Activity

Students can learn more about the history of the income tax and its importance in funding the federal government’s major involvement in wars and defense, health and welfare, and infrastructure building and improvements.

Students should write a report of at least 150 words (or they can choose a presentation of at least seven slides) that cites at least three resources and addresses the Document Based Question (DBQ) included with the topic listed in the pathfinder below:

“Trace the federal government’s motives in imposing a federal income tax as early as the Civil War and discuss the extent to which it was progressive. In addition, describe public reaction to it when it was ratified as a constitutional amendment in 1913.”

Research Pathfinder

Select American Decades from Databases A-Z

Search for Income Tax

Select The 1910s: Government and Politics: Overview


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