This issue of American Gas features a story on our nation’s tax code and the possibility that Congress and the new administration will attempt to reform this system. The political stars must align to successfully navigate the various challenges that arise when addressing our onerous and often archaic tax structure. I can say from experience that it is hard to do.
Shortly after I was sworn in for my first term in the U.S. House of Representatives in 1981, I voted for the Economic Recovery Tax Act, the first of the two tax cuts passed under President Ronald Reagan, who was himself only seven months into his first term. But there was widespread recognition that it was time for such reform. Reagan campaigned on this issue and was elected by a healthy margin. There was also trust and a great working relationship among the president, Speaker of the House Tip O’Neill, House Ways and Means Chairman Dan Rostenkowski (D-Ill.) and Ranking Member Barber Conable Jr. (R-N.Y.). Compromise was far more achievable then than it is today, and everyone accepted things that, in a perfect world, they might not have wanted. In fact, the legislation, which originated in the House, went through some substantial changes to gain the necessary support in the Senate.
The Economic Recovery Tax Act was certainly not perfect. In fact, another bipartisan effort made further changes to the tax code in 1986, which is considered the last time Congress passed comprehensive tax reform. It was a different time then. Our politics were less polarized. The committees had power and operated on a bipartisan basis. The 1981 bill reduced the top individual tax rate from 70 percent to 50 percent and provided a $37.7 billion tax cut. To put this in perspective, the Trump administration has proposed to increase military spending alone by $54 billion.
Congressional leaders and the administration have said the time is right to tackle tax reform again. I, like many others, believe it is long overdue. Our tax system is overly complex, and we have the highest corporate tax rate of any industrialized nation. I would like to see a tax code that is simple, revenue neutral and pro-growth. It must also be fair, which means it must address corporate and personal income taxes and cannot benefit one segment of our population at the expense of another. The devil is always in the details.
As in 1981, I think this must be done in the first year of this presidency. Again, there is broad recognition of the need for this type of reform today. The legislation will likely originate in the House, where Republicans hold a strong majority, but to pass a more closely divided Senate, the bill must be bipartisan. Few individuals in the history of our legislature are as familiar with the substance and the details of this issue as Speaker of the House Paul Ryan. I am experienced enough not to predict the likelihood that tax reform will happen, but I know it will be as closely watched as any issue in Washington.
At the American Gas Association, we will be advocating for our members, your customers and shareholders. We are in the fortunate position not to have to depend on government to fund upgrading and expanding our infrastructure, but we do need tax provisions that do not pass undue expenses onto our ratepayers or negatively affect the dividends our shareholders have come to depend on. We are not alone in any of these battles, and we will be watching this debate closely and leading a coalition for tax treatment that facilitates our continued growth.
Politics is the art of the possible. Tax reform requires leadership, foresight and a certain degree of trust. I would like to see those stars align again.
President and CEO