As a partisan Congress and a disengaged Administration prepare to debate a possible grand bargain regarding taxing and spending, debt and deficit, it might be instructive to review the reasons for the passage of the Tax Reform Act of 1986 - the last major simplification of the tax code. The law drastically reduced tax rates, broadened the tax base and eliminated many tax shelters and other preferences. The pressures from outside interest groups were as intense then as they are today. The House was under Democratic control, and they confronted a Republican Senate and President Ronald Reagan. Most opinion makers dismissed the possibility of any legislation becoming law. How did they do it and are there lessons to be learned and clues to watch for in the months ahead? The monumental legislation passed primarily because of two reasons:
- The bipartisanship and close working relationships between members of the House Ways and Means Committee and the mutual respect and collaboration between leaders of the House Ways and Means and Senate Finance Committees.
- The full engagement and leadership of the president and his capable team.
The initial steps that current Ways and Means Chairman Dave Camp has taken are encouraging. He has an early commitment from Speaker John Boehner to allow tax reform to go forward. In roughly six weeks, he plans to introduce a working draft of his bill with the goal of presenting it to the full House for a vote before the end of this year. He is working closely with Senate Finance Committee Chairman Max Baucus. He has commissioned eleven bipartisan tax reform working groups made up of committee members that will focus on different components of the Code and compile feedback from industry, think tanks, tax experts and their colleagues and present their findings to the full committee in April. These small steps are significant for a committee that has earned a reputation for partisanship and minimal working relationships between Republicans and Democrats.