	Introduction

Late in the 113 th Congress, former House Ways and Means Committee Chairman Dave Camp introduced a comprehensive tax reform bill, the Tax Reform Act of 2014 ( H.R. 1 ). While no action was taken on H.R. There are various policy options for achieving comprehensive tax reform. One option is to enact a base-broadening reform, maintaining the current system with reduced tax rates, in the spirit of the Tax Reform Act of 2014. A second option is to substantially revise or eliminate the current tax system, instead relying on an alternative tax base for revenues (e.g., taxing consumption rather than income). Tax reform legislation introduced early in the 114 th Congress has tended to take the latter approach, proposing a retail sales tax at the federal level or a flat tax. Framework for Evaluation

In evaluating any change in tax policy, the prevailing economic framework is to analyze the tax policy for equity, efficiency, and simplicity. When considering the fairness of the distribution of tax burdens, the concepts of horizontal and vertical equity are often considered. Vertical equity examines the distribution of tax burdens across different income groups. How much more is a policy question. Efficiency

Tax policy should promote economic efficiency; that is, tax policy should be as neutral as possible by minimizing economic distortions. Will business compliance costs change? Tax Reform in the 114th Congress

Tax reform options continue to be actively debated in the 114 th Congress. A cash flow tax, similar to what is proposed in H.R. 11 ) for FY2016. Additionally, the budget resolution demonstrates some support for congressional action on tax reform. In total, there are nearly 150 revenue proposals contained in the President's FY2017 budget. The revenue-raising proposals in the President's budget include reforms to the international tax system, the elimination of a number of fossil fuel tax preferences, reform of the tax treatment of financial and insurance products, and the closure of a variety of items that the Administration views as "loopholes." While comprehensive tax reform was not enacted, proposals introduced in the 113 th Congress may continue to inform the debate. This proposal would have broadened the tax base and restructured statutory tax rates in both the individual and corporate income tax systems, changed the tax treatment of foreign-source income for U.S. multinational corporations, and made dozens of other changes to the federal tax system (additional details can be found in the shaded text box below). The End Wasteful Tax Loopholes Act ( S. 8 ) proposes to express the sense of the Senate that Congress should enact legislation to (1) eliminate wasteful tax loopholes; (2) eliminate corporate tax loopholes and wasteful tax breaks for special interests; (3) enhance tax fairness by reforming or eliminating tax breaks that provide excessive benefits to millionaires and billionaires; (4) crack down on tax cheaters and close the tax gap; (5) use the revenue saved by curtailing tax loopholes to reduce the deficit and reform the federal tax code; (6) address provisions in the tax code that make it more profitable for companies to create jobs overseas than in the United States; and (7) reform the tax code in a manner that promotes job creation, competitiveness, and economic growth. The Senate budget resolution ( S.Con.Res.
Many agree that the U.S. tax system is in need of reform. Congress continues to explore ways to make the U.S. tax system simpler, fairer, and more efficient. Identifying and enacting policies that will result in a simpler, fairer, and more efficient tax system remains a challenge.
On December 10, 2014, the chairman of the House Committee on Ways and Means introduced a comprehensive tax reform proposal, the Tax Reform Act of 2014 (H.R. 1). The bill proposed substantial changes to both the individual and corporate income tax systems, reducing statutory tax rates for many taxpayers, while repealing dozens of credits, deductions, and other tax preferences. While no further action was taken on H.R. 1 in the 113th Congress, the proposal continues to inform the ongoing tax reform debate.
There are various policy options for achieving comprehensive tax reform. One option is a base-broadening, rate-reducing tax reform, in the spirit of the Tax Reform Act of 2014. An alternative approach would be to substantially revise or eliminate the current tax system, instead relying on an alternative tax base for revenues. Tax reform legislation introduced early in the 114th Congress has tended to take the latter approach, proposing a retail sales tax at the federal level or a flat tax. Similar proposals were introduced in the 112th and 113th Congresses, and did not advance. A cash flow tax for businesses has also been introduced in the 114th Congress.
Both Congress and the Administration have indicated interest in tax reform through their respective budget processes. The budget resolution for FY2016 (S.Con.Res. 11) communicates congressional support for action on tax reform. The President's FY2017 budget proposes a number of tax policy changes, similar to the President's FY2016 budget, including substantial changes in the international tax system.
The prevailing framework for evaluating tax policy considers equity (or fairness), efficiency, and simplicity. Equity examines the distribution of the tax burden across different groups. This information can then be used to assess the "fairness" of the tax system. A tax system that is economically efficient generally provides neutral treatment, minimizing economic distortions and maximizing output. A tax system that is simple reduces administrative and compliance costs while also promoting transparency.
Oftentimes, there are trade-offs to be considered when evaluating tax policy options. For example, shifting toward a consumption tax might enhance economic efficiency. However, taxing consumption rather than income tends to put an increased tax burden on lower-income taxpayers relative to higher-income taxpayers, reducing the progressivity of the tax system. Policymakers may want to consider the trade-off between equity and efficiency when evaluating tax policy options.