Hatch Statement at Joint Committee on Taxation Roundtable Discussion on Tax Reform

WASHINGTON – U.S. Senator Orrin Hatch (R-Utah), Ranking Member of the Senate Finance Committee, today delivered the following remarks during a Joint Committee on Taxation Comprehensive Roundtable Discussion on tax reform:

I commend the Joint Committee on Taxation along with Chairman Camp and Chairman Baucus for convening this meeting. If there’s one thing I’ve learned from the hearings we’ve held in the Finance Committee and will continue to hold, it’s that tax reform is very, very complicated. At times it seems impossible that we could come to any sort of agreement within the Committee, much less in both Houses of Congress.

However, whenever we are sifting through the minutia of tax reform, of which there is plenty, it is reassuring to know that it has been done before. That is why it is so valuable to hear from two of the victors of the 1986 tax reform. Secretary Baker and Leader Gephardt have helped to accomplish what we are now trying to do.

The Finance Committee has already held tax reform hearings on efficiency, complexity and other topics. We’ve held hearings on the tax reform done in 1986. However, tax reform will not magically happen as the result of a certain number of hearings. We can’t simply mix various random ideas and suggestions together in a cake, bake it, and expect to feast on economic prosperity. What I’m saying is, it isn’t enough to assemble lists of good ideas; we have to put together a coherent and workable proposal that has a chance of enjoying broad support. Though I can’t think of a better way to spend a morning than talking about tax policy, I think everyone here would agree that our goal is to eventually get a bill passed and signed by the President.

Some essential ingredients to our tax reform cake that we haven’t spent a lot of time discussing are the fundamental values that will underlie the specific reforms we hope to implement. In putting together various reforms and rates, what do we want our package to accomplish? To answer this question we need to think about how American citizens should interact with their government. One primary value that we need to consider is increasing individual liberty. It sounds simplistic to say, and I’m sure no one would say, or at least admit, they want to diminish liberty, but we can’t take it for granted that whatever we do will make Americans more free from our current tax code.

But what exactly do I mean when I say we should promote individual liberty? I have three criteria that I think will, in part, help us do that.

The three criteria that we must not forget, though not necessarily the only criteria we need to evaluate, are fairness, growth, and simplicity. We could probably spend days or weeks talking about what these words mean, but I will briefly describe what I think about when I hear the words, fairness, growth, and simplicity. Also, the Finance Committee has spent some time looking at these criteria, and we will spend more time doing so.

Regarding fairness, does the tax code make taxpayers feel like they are being taken advantage of? Do they see some shirking their obligations and being rewarded, while others are punished for the same or lesser offenses. Do the rules apply differently to the powerful and well-connected? Are those that derive power from their positions of responsibility over the tax code able to abide by it?

Regarding growth, does the tax code make it harder for someone to start a business, or expand a business, or otherwise take the risk in trying to present something of value to their fellow citizens? The tax code shouldn’t be an argument against working more, or harder, or smarter, as it currently seems to be.

Finally, how much time and money should families and individuals spend complying with their tax obligations? Do we think people should be able to fill out their own tax return, or do we want most Americans to be required to pay someone else simply to obey the law? How much money do we want to tear out of the economy to be spent on tax preparation and reporting?

The three principles I’ve just laid out, fairness, growth, and simplicity, can help us to maximize individual liberty, as we contemplate tax reform. We need to remember that we are not working on Mount Olympus and deciding how best to manipulate the mortals below into living the way we think they should live. As their representatives, we have been tasked on their behalf to study the issues, in this case tax reform, and to recommend to them a voluntary tax code that will sustain their government with their consent.

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