WASHINGTON -- Sen. Pat Roberts, R-Kan., expressed concern that when comprehensive tax reform occurs, it should be carefully structured so that existing industries and investments are not harmed such as on municipal bonds.
Roberts, a member of the Senate Finance Committee, told the American Public Power Association that his constituents have told him they oppose tax code changes that would cap itemized deductions and “effectively raise taxes on individuals subject to the cap.”
The 28% cap, which was proposed in President Obama’s fiscal 2014 budget and has been floated several times prior, would have a significant impact on state and local governments as well as investors, Roberts said.
While the 28% cap had been applied in previous budget proposals it was only for those incomes above $200,000 for individuals or $250,000 for married filing jointly. The new cap however, would apply to taxpayers in the 33%, 35% and 39.6% tax brackets.
“I am concerned that limiting itemized deductions will lead to less demand for tax-exempt bonds and raise borrowing costs for state and local government, including municipally owned utilities, which are so important to the Kansas economy,” Roberts said. “This would be disastrous in the current economic environment, and would lead to a reduction in services, less investment in communities, and potential job losses at the exact time when this type of assistance is most needed.”
Echoing the sentiment of many Republicans, Roberts added that he was particularly concerned that capping or completely eliminating various tax provisions in the tax code would not be in line with a pro-growth tax system but rather used to increase spending.
Roberts skirted the question about if tax reform could be enacted this year, despite his colleagues Senate Finance Committee chairman Max. Baucus, D-Mont., and House Ways and Means Committee chairman Dave Camp, R-Mich., aggressively making steps forward on the issue.
Roberts said that fundamental tax reform is long over due and is necessary if the U.S. wants to enhance its international competitiveness, encourage economic growth and create jobs.
On Thursday Baucus and Camp launched a campaign seeking the public’s input for a simpler tax code. Earlier in the week, several of the tax reform working groups on the Ways and Means Committee presented their findings and suggestions about certain areas of the code to the full committee.