Statements and Speeches
Committee Statement: "How Did We Get Here? Changes in the Law and Tax Environment Since the Tax Reform Act of 1986"
Mar 01 2011
WASHINGTON – Today, Sen. Tom Carper (D-Del.) participated in the Finance Committee hearing, "How Did We Get Here? Changes in the Law and Tax Environment Since the Tax Reform Act of 1986."
A copy of Sen. Carper's remarks, as prepared for delivery, follows:
"Today, the Senate Finance Committee will discuss what in our tax system has worked and what hasn't, and what unforeseen challenges and opportunities have emerged since the Tax Reform Act of 1986. One of my four moral guideposts is anything I do I know I can do better. I think we can apply that rule as Congress revisits our nation's tax policy.
"When considering the lessons from the 1986 Tax Reform Act, one thing that stands out, above all, is that reform efforts were bipartisan. A Republican President, a Republican Senate, and a Democratic House all worked together to craft a bill that—while far from perfect—was a notable improvement over the status quo at the time.
"With comprehensive tax reform—as with so many other critical challenges currently facing our nation—the ability to work across party lines will, I believe, be critical. We need to find reasonable areas of common ground in both the individual and corporate tax arenas.
"Congress also needs to find a way to try to keep a new Tax Code as up to date and 'clean' as possible going forward. The reason that tax reform is before us again—25 years later—is that, almost immediately after tax reform was enacted in 1986, various special interests went right to work slicing new tax breaks out of the Tax Code. Once enacted, these new tax preferences aren't subject to a yearly review, like appropriations. The expansion of new and existing tax preferences not contributes to our annual "tax gap" of $300 billion, but also reduces revenues by more than $1 trillion each year—contributing substantially to our long-run fiscal deficits. Many of these tax breaks for individuals and corporations are good policy, but others are not. A good number are inefficiently designed and don't deliver benefits to the taxpayers who need them most.
"One of the keys to tax reform in 1986 was that Congress, working with the Reagan administration, partially cleaned up the Code and eliminated many of these tax preferences. In part, the revenue raised by eliminated tax breaks was used to help reduce tax rates for all Americans. While our nation's fiscal situation is worse than it was in 1986—requiring us to carefully consider whether or not revenue-neutrality should continue to be one of our goals—in general I believe a similar approach should be considered."