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April 29, 2013
Real Transparency, Anyone?
by Christopher Bergin

Full Text Published by Tax Analysts®

By Christopher Bergin

Christopher E. Bergin (Tax Analysts/Derek Squires)Christopher Bergin is the president and publisher of Tax Analysts and a former editor of Tax Notes.

In a recent op-ed, House Ways and Means Committee Chair Dave Camp, R-Mich., and Senate Finance Committee Chair Max Baucus, D-Mont., said they were dedicated to working on legislation to reform the tax system in "an open and transparent fashion." Taking them at their word, Bergin urges the taxwriters to do just that.

The top two congressional taxwriters have something in common (other than being taxwriters, of course). No, they're not from the same political party, or the same state, or the same chamber of Congress. But Rep. Dave Camp, R-Mich., who chairs the House Ways and Means Committee, and Sen. Max Baucus, D-Mont., who chairs the Senate Finance Committee, have decided they'd benefit from leading efforts to reform the broken tax system.

And the two top taxwriters have at least one other "motivation" in common. They're both running out of time to build their legacies on tax reform. Last week, Baucus announced that he will not seek reelection in 2014. And, because of GOP-imposed term limits, Camp must give up his chairmanship in the next congressional session at the beginning of 2015.

Now, I'm sure there are all kinds of saintly reasons for Camp and Baucus to assume the mantle of tax reform, but let's face it: They're politicians. And if tax reform ever comes to pass, it will be because interests have begun to align. That's because tax reform is not about partisan politics; it's about special interest politics. And Camp and Baucus will be able to build coalitions for tax reform only by showing their colleagues what's in it for them, or by offering a special interest to a particular colleague.

If they do produce tax reform legislation, it will be loaded with "rifle shots" -- narrow, targeted provisions that are slipped in under the radar, many of which will benefit one taxpayer who can return that favor to one politician. The taxwriters will draft many of those provisions to disguise who that taxpayer (or, more likely, non-taxpayer) is. We all know how the game is played, and we'll excuse ourselves by convincing one another that on the whole, the greater good of tax reform legislation will outweigh the targeted faults.

Camp and Baucus seem reasonably confident they will succeed, at least if you believe the headline of their recent Wall Street Journal op-ed: "Tax Reform Is Very Much Alive and Doable." Their confidence is a bit surprising, especially when you consider that the only public support they've received from President Obama is his endless call for everyone to pay their fair share (what does that mean, anyway?).

People disagree about what makes a tax system fair. One may think a progressive tax system is fair because those who have more should pay more. Another may find a regressive system fair because the poor aren't contributing enough to society and should ante up. Another may think that fair means everyone pays the same rate, or even the same amount.

The problem is that the rifle shots and special interest provisions Camp and Baucus need to move their tax reform through Congress will make the reform inherently unfair. Those provisions will favor special interests at the expense of the public interest.

I'm not trying to throw cold water on the effort. Camp and Baucus have an idea about how to help make whatever they design more fair. As they wrote in their op-ed, "We are dedicated to writing bills in an open and transparent fashion. No cutting deals behind closed doors. You get a say, employers get a say, and our colleagues -- your representatives and senators -- will get a say."

Here's what I say: Do it! Tax systems that are designed, written, and administered in a transparent way are fairer than those that aren't. I don't think we need a philosophical debate about that one. When I say things like that about how to write our tax laws, others often call me a silly idealist. Fine, but I'm a pragmatist as well. I've got a practical idea to guide Camp and Baucus down the road to the Damascus of tax.

The lawmakers should follow a simple rule: Make all significant communication between lobbyists on the one hand, and lawmakers and their staffs on the other, a matter of public record. That would include face-to-face meetings, phone calls, e-mails, and old-fashioned snail mail.

Moreover, after face-to-face meetings, lobbyists, lawmakers, and staff should expect calls from the media. Lobbyists can respond with a quick "no comment," but lawmakers and staff would have to fess up about what happened (who said what, who decided what, and so on). Otherwise, taxwriting will remain an insider's game.

That's an idea to get Camp and Baucus started, provided they meant what they said about writing bills in an open and transparent fashion. We all know that in writing any tax reform plan, taxwriters will invariably pick winners and losers. But they should be upfront with everyone about it.

At Tax Analysts, we have had a motto for more than 40 years regarding transparency. It comes from an obscure treatise on administrative law. It goes like this: "Secret law is an abomination!" (We probably added the exclamation point.)

If secret law is an abomination, so is making law in secret. I hope our chief taxwriters remember that as they confront the special interests that will influence their efforts.

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