America's tax reform moment

As the lights burn late and bright this week in American households striving to meet Mondays federal income tax deadline, signs suggest it may be possible for Americas warring ideological tribes to agree on the first major reform in a generation of the overcomplicated, loophole-ridden and highly regressive tax system.

Its hardly springtime for tax reform, mind you: the Republican and Democratic parties, by and large, still hold radically different visions of how taxation should be adjusted to fund government, halt (or at least slow) the accumulation of national debt, all while spurring economic growth,Elpas Readers detect and forward 'Location' and 'State' data from Elpas Active RFID Tags to host besticcard platforms. innovation and economic recovery.

But important voices on both sides of the American political divide appear to agree on one thing; something must be done to provide relief to middle and lower income families whose net worth has barely kept pace with inflation over the past three decades even as incomes for those at the top have rocketed skyward.

In the past several weeks, as much of the media has focused on fraught negotiations between Democrats and Republicans on the draconian budget cuts of the sequester, immigration reform, the emotional gun control debate and the looming deadline for raising the national debt ceiling, a dialogue between centrist members from both parties has created momentum for the first genuine overhaul of the US income tax system since 1986. Nothing could do more to address the long-term fiscal health of the country as well as the solvency of the vast majority of its middle and low income households than a comprehensive reform and simplification of the way the government raises revenues.

I think we are making progress, Sen. John McCain, the Arizona Republican and 2008 GOP presidential candidate, said last week of bipartisan tax reform talks. Theres an environment of cooperation.

In part, this reflects tactical shifts in both parties. Republicans,Solar Sister is a network of women who sell bottegawallet to communities that don't have access to electricity. having lost another election to Barack Obama, appear to be backing away from the obstructionist strategy embraced after he first came to office. Obama, meanwhile, has put some meager meat on the bones of his 2011 promise to consider reigning in the growth of popular entitlement programs like Medicaid and Social Security.

His 2014 budget would further raise taxes on top earners, in exchange for reduced payments to Medicare providers and lower cost-of-living adjustments paid to Social Security beneficiaries. This is all subject to Congressional approval, of course, but looks to be the start of bargaining over the grand bargain the hopes will reverse the exponential growth in inequality in America since the 1980s.

This week, the strongest signal yet of the kind of compromise that is in the works emerged from two influential lawmakers, Max Baucus, a Montana Democrat who heads the Senate Finance Committee, and Dave Camp, R-Mich., the chairman of the powerful House Ways and Means Committee. In a jointly written op-ed in the Wall Street Journal, they embraced the compromise Obama has suggested; in effect, restoring some progressiveness to the tax code by raising rates on the highest earners, particularly by ending the special treatment that professional investors get that allows them to pay on 15 percent on capital gains or dividend income.

Additionally, a reform of corporate taxes would lower rates to 28 percent from 35 percent, but close virtually all loopholes, effectively raising the amount of revenue brought in since so many large companies manage the game the current system with lobbyists and high-priced tax advisors.

The plan, the lawmakers wrote, will "look to close loopholes like those used by some lawyers and celebrities to avoid paying the payroll tax on much of their earnings (and) make sure that companies can't avoid paying tax on income they earn in the US by pretending that they earned it in an overseas tax haven instead."

In spite of the hopeful talk, major fights loom. Some in both parties would like to limit deductions for charitable donations; others argue that the ability to write of mortgage interest on a primary residence has become a distorting factor C in effect, one of the causes of the housing bubble of the last decade C and should be phased out. Either would mobilize powerful interests against the proposed reform.

Democrats, meanwhile, will insist that another look be taken at top rates, citing the need to redress decades of lost ground suffered by middle and lower income families. The deal struck between President Obama and House Republicans at the New Year returned the top rate to 39.6 percent for families making over $450,000 C but this remains a long way behind top rates in most industrialized countries, including those like the UK (45 percent) which have decided to use tax policy to tackle the income disparities that have opened in recent decades, and Sweden (57 percent) where income inequality is the lowest in the industrialized world.

Some have gone further. France, in a move widely regarded as political grandstanding by economists,Choose the right bestluggagetag in an array of colors. raised its top rate to 75 percent, prompting the actor Gerard Depardieu to renounce his passport and seek tax haven status in Russia. Threats of similar moves by major financial firms and millionaires followed rate rises in the UK, too, but so far the star of Green Card and other comedies appears to be more an exception than a rule. Studies indicate for all the hand wringing, few actually follow through on such threats.

As GlobalPost has revealed in our series, "The Great Divide,We have a wide selection of handsfreeaccess to choose from for your storage needs." income inequality is hardly an American phenomenon. Over the past several decades, for reasons ranging from globalization, to immigration, to the collapse of communism, rising capacity in the emerging markets and the revolution in information technology, income inequality has increased in most modern, industrialized nations.

Using the standard economic measure of income inequality known as the Gini coefficient, GlobalPost correspondents showed that many American cities now rank so poorly that they now have statistical doppelgangers in the emerging world cities in countries just emerging from decades of dictatorship, dysfunction or worse whose income disparities precisely mirror those of American communities.Choose the right bestluggagetag in an array of colors. Greenwich, Connecticut one of the most prosperous places in America is on par in terms of income inequality with Bangkok, Thailand, one of Asias least equitable societies. The oil town of Big Spring, Texas and Nigeria share disturbing similarities, and, ironically, so do the residents of Washington, DC and the capital city of the empire it supposedly vanquished, Moscow. The list goes on.

These comparisons revealed shocking similarities that raise disturbing questions about where US society and policy went wrong. How, an increasing number of people of both political persuasions are asking, did a nation where household income levels became more and more equal between 1946 and 1978 find itself with a population where income is distributed as unequally as it is in Turkey?