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Up next for Obama: Tax system overhaul

December 10, 2010

Not content to fight with his own party over the continuation of the tax deal he cut with Republicans, Obama now has set his sights on a bigger tax battle.

When the 112th Congress convenes in January, the prez reportedly wants to tackle comprehensive tax reform.

It's not officially on Obama's legislative wish list yet, but the New York Times reports that the Commander in Chief has directed his economic team and Treasury Department analysts to review ways to close loopholes and simplify corporate and individual income taxes.

Apparently, Obama is intrigued by his deficit panel's findings.

One proposal, the Zero Plan, says that by eliminating tax expenditures — that's all those often very complex deductions, credits and exemptions that end up costing Uncle Sam money — the tax code obviously would be smaller and tax rates could be dramatically compressed and lowered.

It's a worthy goal. The last significant tax system overhaul was back in 1986.

Since then, the tax code has again become convoluted and bloated. But recent efforts to tackle overall tax reform have been abandoned because of practical, logistical, economic, philosophical or political concerns — or varying combinations of all those reasons.

Just look at the receptions that greeted both this week's announced tax cuts deal and, a week before, the deficit panel's tax proposals.

Of course, healthy disagreement and discussion on tough topics like taxes are to be expected. And in an ideal world, such discourse would produce a better result.

But we're talking Capitol Hill. That's definitely not an ideal world.

Maybe the growing public clamor for federal deficit reduction will be the catalyst for a real examination of our tax system.

Then again, maybe those new folks who were elected in November to the House and Senate on budget-cutting platforms will find once they settle into their Washington, D.C., offices, that they like them.

And in most cases, folks in the nation's capital find that the best way to stay there is to not do too much.

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TAX-SAVVY WAYS 
TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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