Senator Max Baucus and Representative Dave Camp continue to move forward on tax reform. A package that simplifies and flattens the code while lowering rates is badly needed and could help reinvigorate our stagnant economy. One of the dangers of comprehensive reform is that economically-damaging policies can work their way into the code too. Earlier this year Chairmen Baucus and Camp formed working groups to gather tax reform ideas from various stakeholders. The Joint Committee on Taxation (JCT) recently summarized those comments and published their report.
In a troubling development, the JCT report only includes comments in support of a carbon tax and excludes those comments opposed. AFP’s substantive arguments against a carbon tax were omitted. Two other groups, the National Association of Manufacturers and the National Rural Electric Cooperative Association, also urged Congress to oppose carbon or energy taxes and their comments were omitted from the final report as well.
JCT’s report mentions carbon taxes five times, all in favor of imposing this damaging tax that will drive up energy prices, cost American jobs and undoubtedly grow government. Those comments include:
- The Economic Policy Institute’s recommendations (page 463)
- The Center for American Progress’s recommendations (page 468)
- The Roosevelt Institute Campus Network’s recommendations (page 469-70)
- The American Enterprise Institute’s recommendations (page 485)
- Working Group on Energy’s summary of other comments (page 503)
Nowhere does the JCT report mention that other commenters (at least AFP, NAM and the rural co-ops) oppose this painful tax and recommended against it in their comments. In early April, AFP submitted comments on a range of much-needed tax reforms. We included a section (pages 20-24) that discussed why carbon taxes are a bad idea, including:
- The economic impact of higher energy costs,
- The fact that carbon taxes act like a VAT increasing costs at each stage of production, and
- That carbon taxes are likely to have minimal environmental benefit.
None of these policy concerns were included in JCT’s report, conspicuously denying those with interest in tax reform the opportunity to weigh the costs associated with imposing a carbon tax on the country.
Thankfully, JCT did include numerous other AFP comments in their report. In total AFP recommended 23 specific code changes or policy considerations Congress should bear in mind when advancing tax reform. Eighteen of AFP’s recommendations were mentioned, in whole or in part, in JCT’s report. Two of the issues that AFP discussed were not specifically covered in the report: our desire to eliminate the Marginal Well Credit and indexing marginal individual income tax brackets to wage growth). Three issues AFP commented on were covered in the report but AFP’s position was excluded: our desire to eliminate the Enhanced Oil Recovery Credit, our opposition to a carbon tax and the possibility of phasing out the Mortgage Interest Deduction.
AFP is glad to see that comprehensive tax reform is moving forward. It is also gratifying to see that Chairmen Baucus and Camp are soliciting ideas from a broad range of stakeholders. However, we are concerned that opposition to a carbon tax was apparently excluded from the JCT summary report. In other sections of the report when there were positions on both sides of an issue, JCT included both positions. Why not do so for an issue as contentious as a carbon tax?
Is the committee sandbagging for a carbon tax?