On July 8, the five Senate Finance working groups released their reports on tax reform. The groups, which were formed back in January, were tasked with evaluating the tax code and providing solutions for perceived issues with the code. The groups analyzed international tax, individual income tax, business income tax, savings and investment, and community development and infrastructure.
While the reports highlighted issues that must be tackled by tax reform efforts, they did not always offer clear solutions. For example, the business income tax report stated that “[m]aking a fundamental shift to consumption-oriented taxation is a major change that may not necessarily be undertaken in the near term . . . [h]owever given the pro-growth effects of consumption taxes, the working group believes that the issues above and consumption-based tax systems in general deserve the attention of the committee as tax reform efforts continue.” However, the reports did offer a few specific solutions. For example, the savings and investment working group provided detailed solutions that would likely be supported by many in Congress.
The reports highlighted a number of general problems with the current tax system, but as expected, were not able to provide the mythical all-encompassing tax reform solution. International tax reform will likely be a major issue in the coming year and potentially into the next election cycle, but the reports will likely only have a minimal impact on future tax reform discussions.
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