WASHINGTON Nov 7 Now that President Barack
Obama has clinched a second term, will he embrace one of the
most politically vexing tasks on his to-do list - streamlining
the mind-numbing U.S. tax code?
Backers of a top-to-bottom overhaul hope so, with momentum
building for such a feat, last accomplished under President
Ronald Reagan in 1986. It will be Obama's choice, those in both
parties agree, to make a bold proposal and use his bully pulpit
to push it through.
"You need presidential leadership," said Michael Mundaca,
who was Obama's assistant treasury secretary for tax before
returning to Ernst & Young. "You need the power of the Treasury
tax policy and White House economic team and the IRS
(tax-collecting Internal Revenue Service) to do something this
Obama, who defeated Republican Mitt Romney for re-election,
is among those in both parties who say the tax system is overly
complex and stifles growth.
Raising new revenue will be a major challenge of Obama's
second term, with a deficit topping $1 trillion. Many say a tax
code rewrite is a place to get it but the battle will be uphill,
with interests from homeowners to union workers to insurance
companies all fighting to keep their benefits.
Not to mention a Republican-controlled U.S. House of
Representatives, home to the tax-writing Ways and Means
Committee. Many Republicans dispute that new revenue is needed
Besides the deficit push, congressional hearings by the
dozens and circulation of reform blueprints have prompted some
analysts to predict the odds are the best in decades for a major
revamp in the next few years.
The president's critics argue that he has failed to take the
lead, for example, by not endorsing the Simpson-Bowles deficit
panel's recommendations, which included options for major
Jared Bernstein, a former Obama economic adviser, points to
Obama's budget proposals of recent years. Obama backed trimming
tax deductions to a maximum of 28 percent of income for the
wealthy and sought changes to the tax treatment of debt as one
way to pay for a cut in the corporate tax rate.
"He actually has a fairly extensive paper trail on tax
reform," Bernstein said before Tuesday's elections.
The tax code was last significantly scrubbed clean in 1986,
with a significant push by Reagan in his second term. Reagan
directed his Treasury Department to prepare a proposal but
cleverly pursued it only after he was safely re-elected.
Skeptics and some Republicans caution that Obama will face
the same predicament that has dogged him for the last two years:
Republicans kept control of the U.S. House of Representatives
and the Senate remains closely divided but controlled by
Democrats, according to late projections.
Regardless, a 1986-like revamp will be an uphill climb,