Tax Reform: Listen, Do You Want to Know a Secret?

By Ken Berry
 
Congress appears to be getting serious about comprehensive tax reform. In the latest development, the respective party leaders of the Senate's tax-writing committee  Chairman Max Baucus (D-MT) and Orrin Hatch (R-UT)  have promised that any tax reform proposals made by their colleagues will be kept secret for fifty years. The submissions will be locked away in a vault by the Senate Finance Committee (SFC) and the National Archives until the end of 2064.
 
Only a limited staff of ten members will have direct access to the written proposals made by senators to simplify the tax code as part of the SFC's "blank-slate" process. In addition, each submission will have its own ID number and will be password protected. The vow of secrecy was communicated to senators via an internal memo dated July 19.
 
Presumably, many of the forthcoming suggestions would substantially reduce or eliminate tax deductions and credits or close other loopholes that could be valued by a senator's constituents. Also, special interest groups and lobbyists are already gearing up for a protracted battle. This way, lawmakers won't have to worry about the potential fallout while they're still in office.
 
The unusual move shows the significance that Baucus and Hatch are attaching to the blank-slate plan. They've indicated that they want to involve as many of the 100 senators as possible. According to Baucus, early indications are that the secrecy will have its desired result.
 
"Several senators have said to me how important that is to them," he said. "It's quite significant." Baucus has announced that the SFC expects to mark up a tax reform bill this fall after the submissions have been digested. He suggested that senators who participate in the blank-slate process now will have more influence over the final package than those who choose to sit on the sidelines.
 
Nevertheless, Hatch has commented that he still expects to receive oral suggestions from a number of senators. Other sources  including Senator Richard Burr (R-NC)  have gone on record as saying that Republicans in the Senate won't likely commit to any thoughts in writing. "We're getting a lot of input regardless," said Hatch. "All I want is input. I don't care how they do it, whether it's in writing or whether it's personally."
 
Both the Democrats and Republicans will receive a copy of each submission. The authorized staffers will record when copies of proposals are made, who made them, and how many were made. According to the July 19 memo, a submission may be released publicly only if there is no way of identifying the senator who proposed it.
 
Prior to the promise of secrecy, there was widespread speculation that Baucus and Hatch wouldn't be able to keep proposals for the bank-slate plan on the sly. With the stakes set so incredibly high  as much as $1 trillion in annual tax revenue could be on the line  it would not be surprising if leaks occurred. It's now the intention of the SFC to move forward under the cloak of secrecy.
 
Related articles:
 

You may like these other stories...

Senate Takes Different Approach from House for Highway and Bridge FundEarlier this week, according to a New York Times article, the Senate agreed to fill the coffers of the fund that pays for highway and bridge repairs with...
There it stands, your client's 100-year-old, rickety, vermin-infested barn or former hotel or whatever the darn thing once was. And she's considering what to do with it. There are two words that can help her decide...
It's not a reality—yet—but accounting software is poised to eliminate accountants. We are at a tipping point for many similar professions: online education replacing professors, legal software replacing...

Upcoming CPE Webinars

Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.
Aug 20
In this session we'll review best practices for how to generate interest in your firm’s services.
Aug 21
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.