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1986 Washington Fiscal Watch [1] (1986)

handle is hein.tera/wasfishwa0003 and id is 1 raw text is: TAX FOUNDATION, INCORPORATED ONE THOMAS CIRCLE, N.W., WASHINGTON, D.C. 20005-5802 (202) 822-9050 WASHINGTON FISCAL WATCH Latest Intelligence on Trends for Tax Foundation Members Washington, D.C. 6 P.M. January 23, 1986 Dear Member: Our best judgment at this early stage in the Second (and last) Session of the 99th Congress and the Sixth Year of Ronald Reagan's Regime is that Congress will enact The :nternal Revenue Code of 1986 after much to-ing and fro-ing and beating of breasts and massaging of egos plus special interests on Capitol Hill. The House-passed tax bill, H.R. 3838, is entitled The Tax Reform Act of 1985. It enacts The Internal Revenue Code of 1985. Assuming Senate passage and eventual final approval by Congress and Reagan, the formal title may be changed to The Internal Revenue Code of 1986. That has a more imposing and nonpolitical ring, somehow, and soft pedals the reform notion, which got trampled more than elevated in last year's frantic bargaining by Ways & Means Committee Chairman Dan Rostenkowski, Democrat of Illinois, who almost got stopped in his Committee. The Internal Revenue Code of 1986 also would impart a nice touch of historic change to this legislation, which should please President Reagan, who is supposed to be convinced that a new Tax Code would be a worthy monument. And it could be. The modern U.S. income tax was born in 1909 as a levy on corporations only. Four years later, this fantastically successful money raiser was extended to individuals' incomes. Endless changes in the rules began at once but it was 1939 before the growing mess was codified (rewritten into a unified body of law arranged in serial provisions of systemized sections for easier reference), and given the name The Internal Revenue Code of 1939. The second Internal Revenue Code, incorporating all changes between 1939 and 1954, was enacted in 1954. That is our present Code and as one of the Tax Foundation's congressional friends told one of our meetings in Washington last summer: This Code is more than 30 years old and needs to retire. The urge for a third try at reforming the system actually began 16 years ago, in 1969, which opened the era of almost annual tax reform acts, each more complex and incomprehensible than its predecessor. The near-universal desire to bring more stability and less uncertainty to the tax jungle is one of the mainsprings of bipartisan support for sweeping tax changes,'even in the teeth of a congressional election this year -- despite the fact that the House version is even.more complicated than the present Code, in places. So we are on the verge of getting the third Tax Code in U.S. history, if - if -- President Reagan stays the course. Without his active support, tax reform is dead. RR's new Derspective. Moving his personal biographer into the White House to start building the official record of his presidency may tell something about a new mind-set in the Oval Office, and some Republicans are not overjoyed about it. One House member notes that in historical terms, pushing through a far-reaching tax reform may seem more important than helping Republicans retain control of the Senate in 1986, for example. An eye on history also tends to make a president's foreign policy goals paramount, sometimes at the expense of shorter-term problems, such as the mounting uproar over Federal spending and the budget. He has no more elections to win, says our source, so he can afford to take the long view, and pound away at his major themes: A stronger defense, a shrinking of Federal welfare intrusions into individuals' lives, and lower individual income tax rates. He'll take tax increases in some other form, if the Senate votes them. And he will go on using the deficit as leverage to reorder and cut back government.

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