In 1986 Congress passed, and the president signed, the most sweeping tax reform bill in the history of the tax code.
Could it be done today?
To answer that question, remember the history.
In December 1985, the House passed a tax reform bill that President Ronald Reagan said he would veto. In the Senate, the bill came before the Finance Committee, which I chaired. We dithered for a while, neither improving nor worsening the bill, but not getting anywhere near anything the president would want.
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What he wanted was lower tax rates. That, for him, was the driving force.
Everyone knew you could dramatically lower tax rates and still be revenue-neutral if you were willing to dramatically close loopholes.
As we were simply treading water, I decided to throw a Hail Mary pass.
How to do it? Four things were critical:
▪ The president must be fully on board.
▪ The bill would have to be bipartisan.
▪ It would have to be done quickly, before special interests had time to gather forces against it. These interests would seek to torpedo a great bill if it affected them in a way they did not like. Add 50 such groups together, and the bill is dead.
▪ It would have to be done secretly.
So the president quickly got on board, and I asked the most intellectual members of my committee, in both parties, if they would join me in secret meetings to see if we could reach a bill. They agreed: Democrats Pat Moynihan, N.Y., George Mitchell, Maine, and Bill Bradley, N.J., and Republicans Jack Danforth, Mo., John Chafee, R.I., and Malcolm Wallop, Wyo.
Over seven days — Tuesday, April 29, to Tuesday, May 6 — this group of seven met in my office, drafting a bill that lowered the top personal income-tax rate from 50 percent to 27 percent and the top corporate rate from 48 percent to 33 percent and still was revenue-neutral. Not a bad week’s work.
We presented it to the committee in open session. It was the first time the whole committee had seen the whole bill. On the same day, it passed 20 to 0.
After three weeks of debate on the Senate floor, the bill passed 97 to 3. It breezed through conference with the House (though the final tax rates were tweaked slightly) and was signed by the president in October.
Could it be done now?
First, is the president willing to get behind any bill that might pass Congress on a bipartisan basis? He must be on board ahead of time. If his position is that the bill must raise revenue and Congress’ position is that it must not raise revenue, forget it. Work instead on the Keystone XL pipeline, defeating the Islamic State, achieving Middle East peace and other issues that might find bipartisan congressional and presidential support.
Next, pick a small cadre, and start working on a bill.
Then, don’t dither. Get at it quickly, and finish it quickly.
And do it secretly. When the secret meetings are over, spring the bill full-blown.
Finally, make sure the bill has grandeur. Small steps will not stir mankind. Giant ones will.
The writer, a Republican, represented Oregon in the Senate from 1969 to 1995.
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