U.S. Sen. Ron Wyden, the U.S. Senate Finance Committee chairman, outlined an ambitious agenda to overhaul the tax code at a USC Gould School of Law conference.
Co-sponsored by the Urban-Brookings Tax Policy Center and USC Gould, the conference, “Income Inequality: Is Tax Policy the Cause, the Cure or Irrelevant?” drew more than 150 scholars, policymakers, academics and students.
This was Wyden’s first public appearance since current Finance Chairman, Sen. Max Baucus, was confirmed as U.S. ambassador to China.
“I particularly appreciate the chance to be with all of you here because this is an important time in terms of talking about the growing inequality of opportunity in our country,” Wyden said.
As head of the powerful Senate Finance Committee, Wyden will have jurisdiction over the tax code, which he called a “dysfunctional mess.” Wyden promised to push for broad reform, including targeted tax breaks to address problems of income inequality.
Renewing extenders in the short term as a bridge to permanent tax reform is among his top economic policy priorities.
“Certainly in the short term, we’re going to have to work with these extenders… You’re not going to do broad reform in the next 20 minutes. What we need to do is use it as a bridge to broader reform,” he said.
Wyden, who has been called a “massive thinker” and was recently named one of the most effective members of Congress, said that middle-income spending needs to be addressed.
While Neiman Marcus and Dollar Tree are flourishing, Red Lobster’s sales are flat — a clear indicator that middle-class consumption is struggling, he said.
“You’ve got to find a way to bring the middle class into that equation,” he said. “And I don’t see how the math really adds up if you don’t because consumer spending is driving 70 percent of the economy today.”
In addition to Wyden, several other leading experts assessed issues and analyzed how tax policy both fosters and mitigates inequality. Emmanuel Saez, University of California, Berkeley, economics professor and director of the Center for Equitable Growth; Scott Winship, a fellow at the Manhattan Institute; Miles Corak, University of Ottawa economics professor; and Leonard Burman, director of the Urban-Brookings Tax Policy Center, shared their insights at the conference.
“Rising economic inequality is one of the great policy challenges of our generation,” Burman said. “Tax policy has played an important role in both creating and mitigating inequality, and that will be a key part of upcoming tax reform debates.”
Added USC Gould Professor Edward Kleinbard, the former Chief of Staff of the U.S. Congress’ Joint Committee on Taxation and conference co-organizer: “Tax reform is necessary and important, but it’s not the entirety of the inequality story. We also need to think about the uses to which taxes are put. If a progressive system is your goal, then larger government spending actually is more important than tax system design.”