In an unsigned “Dear Colleague” to senators released by the committee, Chairman Max Baucus (D-MT) and ranking Republican Orrin Hatch (UT) asked for submissions by July 26 outlining “what tax expenditures . . . should be included in a reformed tax code, as well as other provisions that should be added, repealed or reformed as part of tax reform.”
Read the full text of the Baucus/Hatch letter [PDF 315 KB].
Concerning the tax expenditures intended to be included in a reformed tax code, the letter states:
We both believe that some existing tax expenditures should be preserved in some form…but the tax code is also littered with preferences for special interests… [W]e plan to operate from an assumption that all special provisions are out unless there is clear evidence that they: (1) help grow the economy, (2) make the tax code fairer, or (3) effectively promote other important policy objectives.
According to the letter, the senators contend that their “blank slate approach” would maintain progressivity but skip over the argument, for now, of whether to lower rates or apply the revenue to deficit reduction. A JCT table in the letter indicates that “every $2 trillion of individual tax expenditures that are added back to the blank slate would, on average, raise each of the seven individual income tax brackets by between 1.3 and 2.2 percentage points from what they would be under the blank slate.”
Likewise, the table shows that every $200 billion of corporate tax expenditures that are added back to the blank slate would, on average, raise the top corporate income tax rate by 1.5 percentage points from what they would be under the blank slate.
The JCT regularly produces a list of tax expenditures. Read the latest report (February 1, 2013), covering fiscal 2012-2017: JCS-1-13 [PDF 2.4 MB].